Bogdan Tudorache

Oil prices remained stable, with WTI trading at around $55/ barrel and Brent at around $60/ barrel, according to a Saxo Bank analysis.

Although the short-term outlook has improved, the 2020 outlook remains difficult, with the International Energy Agency expecting non-Opec stocks to exceed demand, thus putting pressure on the Opec+ group to reduce output further, says Saxo analyst Ole Hansen.

However, in the short term, the market found support following a surprising drop in US crude oil stocks and estimates of the intensification of the activity of refineries to meet the growing demand for low sulfur fuel transportation before the coming into force of IMO20 regulations, starting next year. The current demand for crude oil and the subsequent fall in 2020 can be observed in the case of Brent crude oil where the futures contracts for June 2020 are trading at a discount of $2.4/ barrel compared to December 2019, the current month of advance.

The approach to the lower price gap between supply and demand in 2020 will most likely be an important topic for the market before the Opec+ group meeting in Vienna on December 6th. At a time when global growth is slowing and its demand for oil slows, the group will be in a position to further reduce and lower the price further to force an accelerated slowdown in US production growth.

“We maintain the view stated in the outlook for Q4 that Brent crude oil will most likely remain limited to around $60/ barrel before the end of the year,” concluded the Saxo analyst.