Adedapo Adesanya
By Adedapo Adesanya
Brent Crude, the global benchmark, traded close to $63 per barrel on Tuesday, November 5, 2019 as the US and China hammer out details of an initial trade agreement which has affected oil demand globally.
The deal which was described by US President Donald Trump as the “phase one”, would put in motion settlements to the long lasting trade war.
Brent, riding this wave was close to the $63 mark as it was trading up at $62. 95 per barrel, gaining 82 cents, or 1.32 percent. The US benchmark, West Texas Intermediate (WTI) Crude, on the other hand, was also up but by 67 Cents or 1.19 percent to trade at $57.21 per barrel.
The latest development showed that China wants the United States to make a solid commitment towards removing tariffs, saying that without this, a visit to the US by President Xi Jinping would be politically difficult.
Business Post understands that the deal has not reached a balance yet as there were still concerns that China might have made too many concessions as part of the deal while the US was not considerate to China’s main concerns.
With this development, one of the main worries would be where the leader of the two leading global economies will meet to sign the deal after Chile cancelled the Asia-Pacific Economic Cooperation summit due to protests, which both countries were scheduled to attend next week.
On the other hand, following a release of its 2019 World Oil Outlook Report, the Organisation of the Petroleum Exporting Countries (OPEC) had revealed that it will supply a lower amount of oil in the next five years due to expansion in output of U.S. shale and other alternative energy.
According to the report, the production of crude oil and other liquids is expected to drop to 32.8 million barrels per day by 2024 compared with 35 million barrels per day in 2019.
Following key observations, the cartel also set its outlook numbers for global oil demand growth, to 104.8 million barrels per day by 2024, and 110.6 million barrels per day by 2040.
The OPEC+ alliance with Russia had promised to boost oil prices and has since January implemented a deal to cut output by 1.2 million barrels per day until March 2020.
Speaking on Tuesday, OPEC’s Secretary-General, Mohammad Barkindo said he was more optimistic about the market outlook for next year than he had been in October, when he had said all options were open including a deeper cut to oil output amid forecasts of oversupply.
