We expect the upside in Nymex Crude prices to remain capped at $60 per barrel in the last quarter of CY2019.
Crude prices remained strained last week owing to increased US inventory levels, and the overhang of subdued demand on account of the long- extended trade tensions between the US and China.
Nymex Crude fell by 1.5 percent while Nymex natural gas closed the week with 6 percent losses on account of lower consumption based on a forecast of normal weather temperature.
OPEC oil production in October rose by 0.934 barrels per day at 29.65 mbpd. The group is currently pumping around 1.6 mbpd, more than the agreed production limit. Earlier, the largest producer Saudi Arabia swiftly raised oil output in October after attacks on oil facilities, as also other members like Iraq and Nigeria over-producing beyond their targeted quotas.
The IEA also said that the strong Non-OPEC oil supply and oil inventories would continue to grow in 2020. Currently, rapidly increasing US shale oil production, along with global slowdown worries and the negative effects of the ongoing trade war, is the factor behind the bearish oil market outlook.
Looking at the recent global demand supply picture, currently the market is in a deficit of 2.43 mbpd. But, moving into the first half of 2020, the oil market may turn into the surplus of 1.4 mbpd.
Also, if trade tariffs are maintained, we may see a further slowdown in oil demand in 2020. The upcoming OPEC policy meet is to be held on December 5 and 6 in Vienna, where the group is expected to adopt a view on whether to extend oil production curbs beyond March 2020.
Saudi Arabia and Russia, along with other oil-producing allies, are considering a range of options to maintain stability in the oil market ahead of the critical December meeting.
We expect the upside in Nymex Crude prices to remain capped at $60 per barrel in the last quarter of CY2019. Currently, Nymex Crude is trading at close to $56.5 per barrel.
(The author is Commodity Analyst at Narnolia Financial Advisors)Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Are you happy with your current monthly income? Do you know you can double it without working extra hours or asking for a raise? Rahul Shah, one of the India's leading expert on wealth building, has created a strategy which makes it possible... in just a short few years. You can know his secrets in his FREE video series airing between 12th to 17th December. You can reserve your free seat here.