During the Asian session on Friday (December 20), market trading was light and international oil prices fluctuated within a narrow range. They have recorded gains for six trading days and are expected to rise for the third consecutive week and are expected to hit the highest level since 2002. Good performance in December. Oil prices rose to a three-month high before Christmas, boosted by further production cuts by OPEC and its allies, news of a decline in U.S. crude inventories and continued easing of international trade tensions.
Prosper Trading Academy CEO Scott Bauer said: “Oil is still overbought due to the trade deal, but when you analyze the fundamentals, there is still a lot of supply out there.”
A trade deal between the world’s two largest economies improves the global economic outlook, boosting prospects for rising energy demand next year and supporting oil prices.
According to the “Announcement of the Tariff Commission of the State Council on the Trial Exclusion of Products from Tariffs on the United States and Canada” (Tax Commission Announcement [2019] No. 2), with the approval of the State Council, the Tariff Commission of the State Council announced on the 19th the first batch of tariffs for the United States and Canada. Second exclusion list of goods subject to tariffs.
For the first batch of goods subject to additional tariffs on the United States, some goods will be excluded for the second time. From December 26, 2019 to December 25, 2020, the additional tariffs imposed by us in countering the US 301 measures will no longer be imposed. Tariffs, added duties will not be refunded.
The remaining products in the first batch of tariffs imposed on the United States and Canada will not be excluded for the time being. In the next step, the Tariff Commission of the State Council will continue to work on the exclusion of goods subject to tariffs on the United States and Canada, and will announce the second batch of exclusion lists for goods subject to tariffs on the United States and Canada in due course.
Another factor in the rise in oil prices is the new production reduction agreement reached this month between OPEC oil-producing countries and non-OPEC oil-producing countries such as Russia. After OPEC officially announces its production reduction plan, oil prices may continue to rise. Reduced supplies should lead to lower global oil inventory levels, which typically push oil prices higher.
OPEC+ agreed to deepen production cuts by 500,000 barrels per day, and Saudi Arabia announced an additional production cut of 400,000 barrels per day. The dual benefits overlapped and oil prices rose. The above-mentioned production reduction plan clearly exceeds market expectations and is constructive in the near term.
United Arab Emirates Energy Minister Suhail Mohammed Al Mazrouei said in an interview: “As long as the price range is balanced with market factors of supply and demand, OPEC+ members will be satisfied with a crude oil price range of US$60 to US$70 per barrel, or even US$80 per barrel. Reaching the final price depends on a balanced market, which is the OPEC goal.”
In addition, data released by the U.S. Energy Information Administration (EIA) showed that U.S. crude oil inventories fell by 1.1 million barrels in the week ended December 13, and gasoline and Distillate stocks increased. Although oil prices may continue to remain volatile, a strong performance in the next two weeks will make next year’s technical trend more positive on the monthly basis.
U.S. stocks rebounded, setting new records again, as investors chased a rally that has added more than $5 trillion in market capitalization this year. Oil prices topped $61 a barrel, and U.S. Treasuries rose slightly.
After falling slightly on Wednesday, the S&P 500 index exceeded 3,200 points for the first time on Thursday, with the technology, health care and communications sectors leading the gains. The benchmark index rose more than 7% in the fourth quarter and is up 27% year to date
Alec Young, managing director of global market research at FTSE Russell, said, “Stock markets have been higher in six of the past seven days, so Strategically it’s overbought. Investors know that seasonality is good, global growth and trade conditions have improved. The concern is that a lot of this has already been priced in.”
As of the close of U.S. stocks, the benchmark The S&P 500 Index rose 0.5% to 3,205.37 points; the Dow Jones Industrial Average rose 0.5% to 28,376.96 points; the Nasdaq Composite Index rose 0.7% to 8,887.218 points.
The recent trend of oil prices has been positively correlated with the stock market, because a rise in the stock market will often improve investors’ optimistic expectations for the demand prospects of the crude oil market, thus playing a certain supporting role in oil prices.
Ke Xiaoming, a researcher at the Sinopec Institute of Economics and Technology, said in Beijing on Thursday that this oil price forecast is the company’s base scenario. If trade is positive and the U.S. tightens sanctions on Iran and Venezuela, oil prices could rise to $70/barrel.
Otherwise, oil prices may fall to $52, and global oil demand may grow by 1.1 million to 1.2 million barrels per day in 2020. While higher than 2019, it still lags behind the five-year average. Factors such as easing international monetary policy, new refining capacity, and increased demand for middle distillates due to IMO 2020 will drive demand recovery next year. Oil supply is expected to increase by 1.5 million to 1.6 million barrels per day in 2020. </p
