UNITED STATES – Oil prices are now being pulled back from its highest levels for almost two months due to the doubts that the trade war between the United States and China has created. The doubts that sparked among the investors whether the two giant economies could come up with a partial trade deal or not is now affecting the global economy.
This offset news had caused the producers to increase the prices than their previous sessions, and an extension of the cuts for the production is most likely to happen.
As of today, a drop of 14 cents or 0.2 percent has been experienced by the Brent Crude. A barrel is now $63.83. On the other hand, the West Texas Intermediate (WTI) crude futures also experienced a drop of 27 cents or 0.5 percent. A barrel is now $58.31.
Almost two months ago, it can be remembered that the prices have reached their highest. According to the report of Reuters, the Organization of Petroleum Exporting Countries (OPEC) and Russia have are expected to have an extension of their production cuts for another three months, starting mid of the year 2020 once they meet on the 5th and 6th of December.
It has come to their understanding that there is a need to tighten their compliance with the production cuts, mainly from Nigeria and the Iraq members.
Oil brokerage PVM stated that if they impose stricter compliance to Iraq and Nigeria, they would be able to shave up to 400,000 barrels each day. This would help in restoring the balance of the market for the first six months of 2020, and it can also supply the deficiency for the next six months of the same year.
As of today, they agree to cut the production of up to 1.2 million BPD for the next three months.
Also, the doubts brought upon whether the US and China will be able to come up with an agreement regarding the trade deal will help in elating the pressure that has wounded the global economy.
According to a report of the Wall Street Journal, cited from sources who requested anonymity, China is now requesting all the top trade negotiators from the US for a meeting, as Beijing wanted to strike a limited deal with them.
The chief strategist of the CMC Markets and Stockbroking in Sydney, Michael McCarthy, said that one of the primary factors of the demand outlook for the oil industry is the on-going negotiation of the US-China trade war.