AlwaysFreeRegister: These Fundamentals Will Support Oil Prices In 2020


The year 2020 is likely to be a bullish year for the world’s crude oil market with key fundamentals that are expected to support prices. These supporting fundamentals include the US-China trade deal, IMO 2020, OPEC supply cut, and geopolitical tensions in the Middle East.

The US and China have agreed on the phase one trade deal after engaging in the bruising trade war that drags the world’s economic growth. The resolution in the trade war could boost China’s exports to the US, accelerate China’s slowing economy, and hence, improve global crude demand. However, the US support to the pro-democracy movement in Hong Kong, which angered China could pose a threat in both countries’ fragile trade relations.

The implementation of IMO 2020 has provided support to the prices of sweet crude grades over 2019. Several sweeter grades are expected to see prices increase through 2020. The US Energy Information projected that the IMO 2020 would partially trigger higher refinery run rates in the US. EIA predicted that US refinery runs would increase by 3% from 2019 to 93% this year.

OPEC and its allies, known as OPEC+ have agreed to deeper their coordinated supply cut to 1.7 million bpd through March. The alliance will meet in March where it may decide to extend the cut. However, the recent stand-off in the Middle East may give some members an excuse to ease the cut.

US-Iran tensions entered a more serious phase when Washington ordered to kill a top Iranian military leader in Baghdad. The geopolitical tensions in the Middle East have the potential to disrupt the world’s oil supply and are expected to significantly influence prices movement in January 2020.

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January 8, 2020 11:16 AM