International oil prices have strengthened this week, hitting a six-and-a-half-week high, as the market hopes that the United States and China will reach a trade agreement and that Washington may cancel some Feeling optimistic about tariffs on goods exported to the United States. However, the expansion of U.S. crude oil inventories remains rapid, and OPEC oil-producing countries have sent conflicting signals on future industrial policies, limiting further gains in oil prices.
NYMEX crude oil futures closed up 2.15% to US$57.44/barrel; ICE Brent crude oil futures closed up 1.72% to US$62.61/barrel. Both cities hit their highest levels since September 24, reaching US$57.88/barrel and US$63.32/barrel respectively.
Chinese and U.S. officials said this week that if they reach a “phase one” trade agreement, they will cancel the additional tariffs on each other’s goods during the 16-month trade standoff. tariff. This is further evidence of progress in negotiations between the two sides to resolve the conflict.
The trade dispute between China and the United States has slowed global economic growth, prompting analysts to lower their oil demand forecasts and raising concerns about a possible supply glut in 2020.
The outlook for oil demand in Asia is promising
Despite this, ICE Brent oil prices have risen nearly 16% so far this year. This is mainly due to the fact that non-OPEC oil-producing countries such as the Organization of the Petroleum Exporting Countries (OPEC) and Russia will continue to implement production cuts until March next year. OPEC+ will hold a meeting in Vienna on December 5-6 to evaluate production restriction policies.
Customs data show that China’s crude oil imports in October increased by 11.5% compared with the same period last year, reaching a record high.
The Central Bank of China launched a medium-term lending facility (MLF) operation of 400 billion yuan on Tuesday, which is basically the same as the maturity amount on the day. The term is one year, and the winning interest rate is 3.25%, down 5 basis points from the previous period.
The head of energy consulting firm FGE predicts that Asia’s oil demand growth will more than double in 2020, reaching 815,000 barrels per day.
Oil market investors are also paying close attention to the progress of the listing of Saudi Arabian Oil Company (Saudi Aramco). Saudi Aramco finally launched its initial public offering (IPO) last weekend and announced that it would be listed on the domestic stock market.
Saudi Arabia seeks to diversify its economy and diversify investments outside the oil industry to reduce the country’s over-reliance on the oil economy, which will also benefit oil prices.
The market is still concerned about the substantial expansion of U.S. oil inventories
The U.S. Energy Information Administration (EIA) on Wednesday (November) 6) said that U.S. crude oil inventories rose sharply last week due to refinery production cuts and export declines, while refined oil inventories continued a trend of decline for several weeks.
Data from Baker Hughes Energy Services, a unit of General Electric, showed that the number of active drilling rigs in the United States fell for the third consecutive week this week, hitting the lowest level since April 2017.
The Organization of the Petroleum Exporting Countries (OPEC) said on Tuesday (November 5) that although global economic growth drives demand for energy, it will not be the best in the next five years as production from U.S. shale oil and other oil sources expands. oil supplies are gradually decreasing.
OPEC’s 2019 Global Oil Outlook released on Tuesday predicts that the organization’s production of oil and other liquid energy is expected to decline to 32.8 million barrels per day by 2024. The Organization of the Petroleum Exporting Countries (OPEC) is expected to agree to further production cuts at its December meeting. “We expect that the extent of production cuts will be further increased, which means that OPEC supply entering the market will be further reduced.”
Oil-producing countries send contradictory signals
However, OPEC Secretary-General Barkindo’s statement said that he is more optimistic about the prospects for 2020, which seems to downplay further large-scale changes. The need to reduce production.
Asked whether the market will experience oversupply next year, Barkindo said: “We are not at that point yet. At the moment we cannot pre-set all the steps we are taking.”
There is an investigation It was found that OPEC oil production has rebounded from an eight-year low in October as Saudi Arabia’s oil production quickly rebounded, overshadowing Ecuador’s production cuts and the impact of voluntary production curbs by oil-producing countries under the production reduction agreement.
Russia’s oil production fell to 11.23 million barrels per day last month, down from 11.25 million barrels per day in September, but it still does not meet the requirements of the production restriction agreement.
AxiTraders market analyst Stephen Innes said: “Given the signs of disharmony among oil-producing countries, OPEC’s actions in January next year may be less than expected.”
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