Oil prices gain momentum as OPEC forecast supply deficit next year-Reports
Reports have revealed that Oil prices gained momentum on Thursday, regaining some of the previous session’s losses after Organisation of Petroleum Exporting Countries (OPEC) forecast a supply deficit next year.
Brent futures rose 1.5 per cent to $64.67 a barrel, and West Texas Intermediate crude rose 1.5 per cent to $59.63 a barrel.
Daily Times reported on Wednesday that prices had fallen after a report showed an unexpected increase in U.S. crude inventories.
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The market picked up on Thursday, although the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries offered different prospects for the oil market in 2020.
IEA pointed to pressure on oil prices, predicting a sharp rise in global inventories despite an agreement by OPEC and its allies to deepen output cuts as well as lower expected output by the United States and other non-OPEC countries.
The focus was more on OPEC which said, it now expected a small oil market deficit next year, suggesting the market is tighter than previously thought.
Daily Times had reported that OPEC and others including Russia agreed last week to rein in output by an extra 500,000 bpd in the first quarter of 2020.
Oil prices were also supported by the U.S. Federal Reserve keeping interest rates unchanged at a meeting on Wednesday.
“Our economic outlook remains a favourable one, despite global developments and ongoing risks,” Fed Chair Jerome Powell told a news conference.
“While oil prices are trending higher benefiting from a dovish Fed, a weaker USD, the IEA reiterates that despite the deeper oil production cuts, the oil market is likely to be oversupplied in 1H20,” said UBS oil analyst Giovanni Staunovo.
Daily Times gathered that, it is sceptical if Nigeria and Iran will achieve their 100% pledge in the first quarter of 2020 because of their weak compliance with the pact in the past this could see oil prices coming under threat again in the future.
It would be recalled that, oil prices fell on Wednesday after the U.S. Department of Energy’s report showed an unexpected rise in U.S. stocks.
Inventories of petroleum products also increased with gasoline stocks surging by more than 5 million barrels and distillates gaining just over 4 million barrels.
Analysts blamed much of the dip in gasoline demand on winter storms that brought heavy snow to several states, making many roads unfit for driving.
Saudi Aramco hit the $2 trillion target sought by Saudi leader Crown Prince Mohammed bin Salman on Thursday as its shares clocked up the second day of gains, defying some scepticism about the state-owned oil firm’s long-term value.
