By Adedapo Adesanya
The Brent crude, the global benchmark, traded above $63 per barrel on Friday, November 15, 2019 as oil prices gained following fresh optimism over phase one of a potential US-China trade deal lifting prospects for energy demand.
The deal, which was described by US President Donald Trump as the “phase one” deal, would put in motion settlements to a long lasting trade war that had seen both countries place tariffs on goods.
The Brent, following the latest development surrounding the effect of this on the oil market, traded up at $63.29 per barrel, gaining $1.01 equivalent to 1.62 percent.
On the other hand, the US benchmark, West Texas Intermediate (WTI) Crude, was also up but by 98 Cents or 1.73 percent to trade at $57.75 per barrel yesterday at the market.
The latest development followed good news over the 16 month long trade war as confirmed by US Commerce Secretary Wilbur Ross, who said Friday that the negotiations are now down to the last details.
Business Post understands that any trade deal with China curbs demand worries, and this is very important for oil markets as prices will go up. With this development, both Brent and WTI crude benchmarks recorded a second weekly gain in a row.
Meanwhile, earlier in the day, prices for oil had weakened on the premise of the International Energy Agency (IEA), in its monthly report, raised its forecast for oil output growth for countries outside of the Organization of the Petroleum Exporting Countries.
The Paris-based IEA said it expects non-OPEC supply growth to rise to 2.3 million barrels a day in the year 20202, up from its previous estimate of 2.2 million barrels a day, with the set to continue leading the way.
According to the report, heavy oil market inventories and strong market supply would continue next year and that the United States will lead the way but there will also be significant growth from Brazil, Norway and barrels from a new producer, Guyana.
The report came a day after oil prices fell as the Energy Information Administration reported a 2.2 million-barrel rise in US crude supplies in the week ended November 8 and a weekly increase of 200,000 barrels a day to a record 12.8 million barrels a day in domestic crude production.
Ahead of its December 5-6 meeting to review output cuts in Austria, the Organization of the Petroleum Exporting Countries (OPEC) lowered its own non-OPEC output growth forecast in its monthly report.
Looking at this, oil prices are expected to do well in the coming weeks.
Modupe Gbadeyanka