Oil prices hike as OPEC changes 2020 forecast
TOKYO-Oil clocked in gains on Thursday with market sentiment relieving from anxiety as OPEC changes its 2020 forecast mainly from records disclosing increase in US crude inventories.
Brent futures LCOc1 climbed 24 cents, equivalent to 0.4% to $63.96 per barrel at exactly 0242 GMT. Such activity followed after 1% loss on Wednesday brought by US stocks build-up.
West Texas Intermediate crude CLc1 shed 10 cents or 0.2% at $58.85 per barrel after 0.8% defeat from its last session.
The Organization of Petroleum Exporting Countries (OPEC) disclosed that it is anticipating oil market to experience minimal slippage in 2020, indicating that market is tighter than what had been previously forecasted. The shortfall is expected to press despite recent agreement with other producers to restrict supply is implemented.
Statements made by OPEC confirmed that expected surplus next year is far from happening as US production growth starts to slow. However, US inventories consistently gain with crude stockpiles acquiring earnings last week with 800,000 barrels.
Petroleum inventories also inched higher with gasoline stocks swiping in more than 5 million barrels and distillates earning close to 4 million barrels as both commodities surpassed expectations.
“The overall report was very bearish as demand fell off a cliff and total stockpiles climbed to the highest level in seven months,” said Edward Moya, senior market analyst at OANDA.
Investors are also watching out for news regarding Sino-US trade pact and the possibility of it getting signed right before fresh round US tariffs is implemented.
Economic conflict between two largest economies dragged global growth as it directly impacted demand for oil and crude products.
US President Donald Trump is set to talk about sanctions on Chinese imports effective on Dec. 15 with leading trade advisers as markets are cautious on China’s possible retaliation.
“In the near-term, U.S.-China trade remains the primary catalyst and the 500-pound gorilla in the room,” said Stephen Innes, chief Asia market strategist at AxiTrader.