Kenneth Afor with agency report
Oil prices on Tuesday morning surged by 0.67 percent after four consecutive days of decline in the international market due to relative calm in the Middle East as global trade players keep eye on United States and China as both countries prepare to sign a ‘phase one’ trade deal this week.
The London Brent crude was sold for $64.63 per barrel which gained 43 cents at 0.67 percent while the U.S. West Texas Intermediate (WTI) crude futures garnered 32 cents at 0.4 percent for 58.40 per barrel.
Tuesday’s gain was buoyed by the signing of the trade deal by the two largest economies which would take place at the White House Wednesday.
The eighteen-month trade spat according to experts has disrupted global economic growth which has dampened demand for oil among consumers.
Invariably, due to the trade spat, according to an analyst, Tamas Varga at PVM brokerage, global oil demand forecast which was pegged for 1.5 million bpd for the year only reached 890,000 barrels per day but assures that demand could rise as the world fixes its gaze on the trade deal.
“This year, however, the pace is expected to pick up again and is to average at 1.25 million bpd… In case of a trade deal upward revisions can be anticipated,” Varga said.
Although, details surrounding the deal are yet to be spelt out but however, business a.m. gathered that China has made a commitment to purchasing more than $50 billion worth of energy products that will be supplied by the U.S over the next two years.
Notwithstanding, Asia’s largest economy, China, had a significant increase in its crude oil imports in 2019, a 9.5 percent higher from the previous year which made it the 17 consecutive years of continuous growth in crude oil imports due to a number of refineries that were built last year in China.
However, Tchilinguirian, a global oil strategist said the rise in oil prices may continue for the short term bases adding that the Organization of Petroleum Exporting Countries (OPEC) and its allies should not be bothered to talk about another production cuts for the meantime.
“As geopolitical tensions take a back seat for now, we may see more of the same in the short term,” Tchilinguirian said.