Meanwhile, OPEC sees big market opportunities in upcoming years: File Image/Pixabay
In a repeat of the previous two sessions, crude prices on Tuesday rose due to continued optimism over the prospect of mended relations between the U.S. and China, as well as word from the Organization of the Petroleum Exporting Countries (OPEC) that the oil market in 2020 may be stronger than previously forecast.
Brent climbed 83 cents, or 1.3 percent, to settle at $62.96 per barrel, and West Texas Intermediate ended 69 cents, or 1.2 percent, higher at $57.23 per barrel.
News on Tuesday that Beijing was encouraging Washington to remove more tariffs in order to ease the economic impact of the trade dispute between the two countries caused analysts to speculate that if this happens, it would facilitate the signing of a long-awaited preliminary trade deal.
Mohammad Barkindo, secretary general, OPEC
The numbers are looking more refined and the picture is looking brighter
But Jim Ritterbusch, president of Ritterbusch and Associates, warned in a report that "While such a development could accommodate a signing of a Phase 1 deal that would allow for a further increase in risk acceptance and hence, bullish spillover from the equities and into the oil complex, a major long term agreement still appears elusive well into next year."
The prospect of a delay in a long term deal was ignored by traders, who derived additional optimism from remarks made on Tuesday by Mohammad Barkindo, secretary general of OPEC: he told media, "Based on the preliminary numbers, 2020 looks like it will have upside potential; there are definitely brighter spots, [and] the numbers are looking more refined and the picture is looking brighter."
He added that "The other non-fundamental factors like trade issues that have been impacting negatively on the global economy, the news coming out is more optimistic; we have seen the biggest economy in the world, the United States, continuing to defy projections, racing ahead."
Still, the cartel suggested that the market will be in a delicate state for the foreseeable future: in its 2019 World Oil Outlook published on Tuesday, OPEC said its production of crude and other liquids is expected to decline to 32.8 million barrels per day (bpd) by 2024, compared with 35 million bpd in 2019.
Additionally, OPEC now sees oil consumption in 2023 reaching 103.9 million bpd, down from 104.5 million bpd in last year's report; meanwhile, oil demand is expected to increase by 12 million bpd to reach 110.6 million bpd by 2040, also lower than last year's forecast.
Finally, OPEC forecasts a bigger role for itself in coming years, thanks to the expectation that supply from non-OPEC producers will hit a high of 72.6 million bpd in 2026 and fall to 66.4 million bpd by 2040, at which point the cartel will be expected to meet the majority of oil demand requirements," according to Barkindo.