Crude Oil prices posted early gains as OPEC’s outlook for oil demand next year fuelled hopes that the producer group and its associates will keep a lid on supply when they meet to discuss policy on output next month.
Optimism that the United States and China could soon sign an agreement to end their trade war also seeped into the market after White House economic adviser Larry Kudlow said a deal was “getting close”, citing what he called very constructive discussions with Beijing. Brent crude futures were up 30 cents, or 0.5%, at $62.58 a barrel by 0147 GMT, having dropped 9 cents on Thursday.
West Texas Intermediate crude was up 29 cents, or 0.5%, at $57.06 a barrel, after falling 0.6% in the previous session. The rosy mood came after the Organization of the Petroleum Exporting Countries (OPEC) said on Thursday it expected demand for its oil to fall in 2020.
That supports the view among markets that there’s a clear case for the group and other producers like Russia – collectively known as ‘OPEC+’ – to maintain limits on production that were introduced to cope with a supply glut.
OPEC+ on Jan. 1 cut output by 1.2 million barrels per day (bpd), and in July, the alliance renewed the pact until March 2020. “Energy markets will remain fixated on rhetoric from OPEC+, (U.S.-China) trade updates and whether Beijing can somehow de-escalate the situation in Hong Kong without sending more troops.,”
Jitters over geopolitical fallout from the Hong Kong situation linger after violent clashes between protesters and police this week, with Chinese President Xi Jinping saying on Thursday that stopping violence was the most urgent task.
Still, investors shrugged off a bigger-than-expected increase in U.S. stockpiles and rising production. U.S. crude inventories grew last week by 2.2 million barrels, the Energy Information Administration said, exceeding the 1.649 million-barrel rise forecast by analysts in a Reuters poll.
Crude oil production rose by 200,000 bpd to a weekly record of 12.8 million bpd, the EIA said in its weekly report.
