On the first trading day of 2020, global oil prices rose amid Middle East tensions. Despite the near completion of the China-US trade deal, market players showed concerns over the oil supply.
Last Thursday, it was reported that most oil products in the market increased by value. Among those who had higher prices were global benchmark Brent crude futures. It was up by 21 cents or increased by 0.3 percent to $66.21 per barrel. The US West Texas Intermediate (WTI) crude was also $21 cents pricier or increase by 0.3 percent with a value of $61.27 per barrel.
Last Wednesday oil markets were closed for New Year's Day. However, both oil benchmarks were at a record high based on December 2019 values. It was also shown that both shares earned its highest values since 2016 and that the prolonged dispute between China and the US caused the same.
Improvements may be maintained following trade optimism caused by the near completion of phase one of the China-US trade deal. According to the chief Asian market strategist at AxiTrader Stephen Innes, the oil markets are still constantly backed by the trade truce and the uptick in political feuds in Iraq.
He added that the US airstrikes against Iran's Katib Hezbollah militia group over the weekend have caused anger amongst the residents. Thus, the US Embassy in Baghdad deployed more troops to the area last Wednesday.
At present, the Brent crude futures were forecasted to reach a value of $63.07 per barrel which is an increase from December's estimate amounting to $62.50. On the other hand, the WTI is forecasted to yield about $57.70 per barrel, also an increase from its initial December forecast of $57.30.
The report claimed that the increases would be due to the OPEC-led supply cuts. Moreover, it was mentioned that the expected favorable results of the China-US trade deal also boosted market analysts' forecasts for the year as well.
It was revealed that by January of this year, there would be deeper output cuts by OPEC and its partners in the oil industry. It was also reported that OPEC and its allies including Russia would cut about 500,000 barrels of oil per day from the first day of trading, almost twice the value of last year's 1.2 million cuts.
Additionally, the improvement in oil prices was also linked to the fall in US crude inventories. The latter was said to have fallen for 7.8 million barrels per week since December 27, 2019. It was a significantly lower actuality from the 3.2 million barrel cut forecasted by the American Petroleum Institute last Tuesday.
