World oil market to tip into deficit next year
BAKU, Azerbaijan, Dec. 21
By Leman Zeynalova – Trend:
Oil prices extended their decent run of weekly gains, as the price of Brent rose by 2 percent week-on-week, Trend reports citing UK-based Capital Economics research and consulting company.
An apparent thawing of US-China trade tensions boosted expectations of higher oil demand in 2020, reads a report by the company.
The US and China have been in trade war for already 18 months, reciprocally imposing tariffs on hundreds of billions of dollars worth of goods.
The US has imposed tariffs on over $360 billion of Chinese goods, while China has responded with tariffs exceeding $110 billion of US products.
The two countries reached a preliminary deal in December this year, however, many issues remain unresolved. The deal envisages reduction of some US tariffs in exchange for more Chinese purchases of US goods, and better protection for US intellectual property.
“We anticipate that slightly stronger global economic growth coupled with incoming IMO 2020 regulations will boost crude demand, irrespective of how the trade conflict pans out. Together with OPEC+’s recent decision to deepen output quotas, we suspect that the world oil market will tip into a deficit next year,” said Capital Economics.
The latest drawdown in US commercial crude stocks also gave a lift to prices, according to the report.
“Looking ahead, we expect that higher product demand for gasoline and distillates will decrease levels of commercial crude stocks. On the flipside, strategic petroleum reserve (SPR) releases will place some upward pressure on inventories next year, but this will be more than offset by the continued growth in the US’s net import cover.”
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