Adedapo Adesanya
By Adedapo Adesanya
Crude Oil prices were down more than 1.5 percent in the last week with the US benchmark, West Texas Intermediate (WTI) trading just above what analyst called a “critical support zone” while Brent, the International benchmark fell a lot during the week, slicing through the $60 per barrel mark.
Over the week, the WTI moved between $52 per barrel and $54 per barrel while Brent settled mostly at the $59 per barrel. This meant that both crude prices ended a long spanning losing streak but there was no immediate bullish follow-through as this week got underway.
However, oil prices have pared their weekly losses, with both Brent and WTI rising noticeably on Thursday before adding to their gains on Friday morning despite a poor Chinese GDP report.
Oil also stabilised as the tension in Middle East eased, after the US and Turkey signed a cease-fire deal in Syria.
It was also noted that during this period, oil prices did well as a result of the optimism level caused the US-China trade situation and Brexit drove oil prices following UK Prime minister Boris Johnson and the European Union reaching a deal ahead of the October 31 vote.
So, the gains can be partially explained away by improved risk appetite as a trade deal is seen as being positive for the Chinese and global economies, and in turn demand for oil.
Meanwhile, the Energy Information Administration (EIA) report indicated that US crude oil stockpiles rose by 9.3 million barrels to 434.9 million barrels in the week ended 11 October 2019.
Looking at the supply-side of things, reports that US crude oil inventories climbed last week by the most in almost six months suggests supply remains plentiful here.
Further sharp increases in crude stocks may keep price gains in check, although ongoing intervention from the OPEC+ group means the downside will be limited as well.
OPEC and allied producers have pledged to curb supplies in December as OPEC Secretary-General Mohammad Barkindo disclosed during the week that the cartel and its allies would do all it can to sustain oil market stability beyond 2020.
The Organization of the Petroleum Exporting Countries and its allies will meet on December 5 and 6 in Vienna, Austria to review output policy.
Looking at the new week, if nothing else, tensions in the Middle East will continue to put a little bit of pressure underneath the crude oil markets as the uncertainty will still be a major issue.
Oil prices this week may hover between $58 and $59 per barrel for the Brent Crude while the West Texas Intermediate is expected to hold around $53 to $54 per barrel.
