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Oil seems to be bullish

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Brent crude oil completed last week with the update of the local maximum at $64,86 per barrel. The reason for this was the OPEC + alliance meeting that ended on Friday. The participating countries agreed on further reduction of oil production from January 1, 2020 by 500 thousand bpd. Saudi Arabia only will limit its oil production in excess of the quota by 400 thousand bpd. The restrictions will remain in force until the end of March 2020. Most analysts agree that an additional reduction will support the market for 3-4 months. It is also likely that countries that are not members of OPEC+ will increase their market share and nullify the efforts of the cartel and its allies.

Short-term positive sentiment for the oil market was interrupted by negative data from China, published on the weekend. Exports fell in November by 1,1% y/y, with a consensus forecast of 1% growth. Also a trade agreement must be signed before the end of this week. Otherwise, the Trump administration will increase fees on Chinese imports by $156 billion.

In the long run, oil seems to be bullish. Bank of America believes that strict compliance with the OPEC + deal, positive economic news, including the signing of the trade agreement between the US and China, could increase Brent crude oil price up to $ 70 per barrel by Q2 of 2020. Goldman Sachs analysts are also optimistic. They raised their forecast for next year from $60 to $63 per barrel.

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Source: https://olymptrade.com/
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