Adedapo Adesanya
By Adedapo Adesanya
Crude oil began to feel the advantage of the output cut deal reached last week by Organisation of the Petroleum Exporting Countries (OPEC) on Tuesday. At the market yesterday, major futures recorded gains despite uncertainties from the lingering trade war between the United States and China pressuring prices and choking the market.
Business Post had reported on Monday that the trade spat between both nations affected China’s export numbers which in turn caused Brent crude, the international benchmark to trade down at $64.19 per barrel, and the US West Texas Intermediate (WTI) crude down to $59 per barrel.
But on Tuesday, the Brent futures rose by 11 cents or 0.17 percent to $64.36 per barrel, while the WTI crude appreciated by 26 cents or 0.44 percent to 59.28 per barrel.
Other futures like the OPEC basket also traded up last night by 23 cents equivalent to 0.51 percent to $65.57 per barrel. The Nigerian Bonny Light was up by 3 cents or 0.05 percent to trade at $65.50 per barrel.
OPEC and allied producers like Russia agreed to deepen output cuts from 1.2 million barrels per day (bpd) to 1.7 million bpd to support prices after last week’s meeting in Vienna.
The decision, however, has faced a bigger adversary in form of the the trade war between the US and China with the latest being a December 15 deadline for the next round of US tariffs on Chinese imports which dragged down prices.
Looking ahead, crude oil inventories in the US were expected to have dropped last week, meaning this may signify that oil prices will perform better on Wednesday.
This is heavily left to the American Petroleum Institute (API) which is scheduled to release its data for the latest week on Tuesday (yet to be released as at press time) and the weekly Energy Information Administration (EIA) report set for release on Wednesday.
Even if positive responses come from the data, investors will have to look ahead at the British election scheduled to hold on Thursday alongside the US and European Central Bank (ECB) meetings.
