Oil prices closed on a third straight weekly high on Friday, with prices set to remain close to the $60-$65 (Dh220.2-Dh238.5) range thanks to market optimism around the US-China phase one trade deal and extended production cuts by Opec+ agreed to earlier this month.

Oil markets on Friday saw Brent closing on $66.14 and West Texas Intermediate (WTI) on $60.44, as oil prices look set to close the year on a more positive note.

Markets on Thursday received more good news on the US-China trade deal, with China announcing a list of tariff exemptions on six chemical and oil products from the US.

Reflecting that positive sentiment, JP Morgan in its latest market outlook report for 2020 raised its oil price to $64.5 with a price peak of $67 in the first three months of 2020.

“Oil prices will likely be boosted by the higher cuts in supply committed to by the Organisation of the Petroleum Exporting Countries and its allies (Opec+) and the envisaged rebound in global growth,” its report said.

“JP Morgan Research expects the oil price to peak in the first three months of 2020 at $67 per barrel before dampening … Brent should average $64.5 per barrel in 2020.”

Other major firms such as Goldman Sachs and UBS have also raised their oil price outlook for 2020 in the low $60 range.

Market oversupply

Despite the good news around the phase one trade deal and Opec+ production cuts, oversupply concerns will continue to weigh heavily on oil prices next year. The International Energy Agency in its monthly report estimates that oil markets will have a surplus of 0.7 million barrels per day (bpd) in the first three months of 2020, with UBS also anticipating a surplus of 0.3 million bpd in 2020 and 0.6 million bpd in the first half of 2020.

Those oversupply concerns were seen on oil markets last week, with a rise in US oil rig counts sending oil prices down on Friday, despite prices closing on an overall weekly high.

Source: Gulf News