Oil Extends Rally as OPEC Assures Positive Demand Growth

By Adedapo Adesanya

Oil prices extended gains on Friday on the back of assurance from the Organisation of the Petroleum Exporting Countries (OPEC) that there were signs of growth in oil demand for 2020.

After the comment, the international benchmark, the Brent crude, was up 37 cents or 0.57 percent to $64.99 per barrel, while the US West Texas Intermediate (WTI) crude rose by 19 cents equivalent to 0.32 percent to settle at $58.72 per barrel

OPEC Secretary General, Mr Mohammed Barkindo, said on Friday that worldwide oil demand could surprise to the upside this year. “By and large what we see from our side is an upside potential of growth from the demand side of the equation, which will affect the total balance for the rest of the year,” he said.

“We are hoping that some of the challenges that we’re facing in terms of international trade will be addressed,” he added.

According to the OPEC chief, in 2019 oil had a considerate growth of 35 percent but this did not support as it did in previous years as a result of rising shale production in the United States, which the cartel considers in its decision.

It was a result of this that the oil cartel and its allies known as OPEC+ agreed to cut production by an additional 500,000 barrels per day for the first quarter of 2020. This lifted total production cuts to 1.7 million barrels per day, above the 1.2 million barrels per day cut agreed upon in December 2018 and will expire in March 2020.

“We remain focused on stability for the first and second quarter of 2020. The decision was to ensure that there’s no imbalance in these quarters.

“But the total equation is looking at both supply and demand sides. We can only address the supply side of the equation. The demand side is something that we watch with very keen interest,” said Mr Barkindo.

At the previous session, oil had been boosted by the signing of the Phase One trade deal between the US and China, which will see China purchase $200 billion worth of US goods over two years and see China’s access to financial services firms.

Also, the decision by the US Senate to restore U.S.-Mexico-Canada Free Trade Agreement after the signing of the Phase One trade deal between U.S and China also supported prices.