By Adedapo Adesanya
Brent Crude extended gains on Thursday, December 26, after the Christmas break, affected by data, which showed a weekly decline than expected in US crude inventories.
The data by the American Petroleum Institute (API) showed that U.S. crude supplies fell by 7.9 million barrels for the week ended December 20 which was more than analysts’ expectations of 1.83 million barrels.
As a result, Brent Crude continued to trade around the $66 mark on Thursday, climbing 59 cents or 0.89 percent to $66.75 per barrel, while the US West Texas Intermediate (WTI) crude was up by 57 cents or 0.93 percent to settle at $61.68 per barrel.
The outlook of the market had been looking positive following the agreement reached by the US and China on the trade war between the world’s two biggest economies that has affected global demand for crude.
The US President, Donald Trump had personally announced a phase one deal and scrapped tariffs on Chinese goods that were set to go into effect, and adding recently that he and the Chinese President, Xi Jinping will have a signing ceremony for the Phase 1 agreement to end their trade dispute that was put together earlier this month on Tuesday.
Also from Thursday, six products from the United States became exempt from tariffs as a further sign to establish a better relation affected by the eighteen-month long war.
The tariff waivers will apply to four chemical products, such as metallocene high-density polyethylene (HDPE) and a special grade of linear low-density polyethylene (LLDPE), and refined oil products that include white oil and food-grade petroleum wax.
However the market faced a new threat as the announcements about deeper output cuts by the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers such as Russia which was agreed during the December 6 meeting in Vienna to deepen production cuts by a further 500,000 barrels per day (bpd) risks bringing about lower demand which may affect this decision.
The OPEC alliance face stiff competition of more supply from the United States, Brazil, Norway, Guyana and recently a new partnership between Saudi Arabia and Kuwait. Both countries this week agreed to end a dispute over their Neutral Zone, which can supply as much as 500,000 barrels per day of oil, or about 0.5 percent of global demand.
