Month in brief

• Published date: 01 December 2019
• DOI: http://doi.org/10.1111/oet.12746
• Date: 01 December 2019

THE MONTH IN BRIEF

Month in brief

Crude prices have risen slightly over the month, with

January Brent futures beginning at just under $62/bbl,

and reaching $64.27/bbl on 26 November, although levels

fell back below $63/bbl at the end of the month. The

market was fixated on rumors of a possible resolution to

the United States-China trade talks—set against the risk

of a 15% US tariff on a further $160 bn of Chinese goods

scheduled for early December, if no solution can be

found.

Improved trade relations between the United States

and China are seen as bullish for world economic

growth, which in turn should support higher global oil

demand—and higher oil prices. The month began with

reports that the trade negotiations were progressing well,

and by 7 November, January Brent reached $62.29/bbl.

Equity markets also moved higher on the reports.

However, at the end of the first week of November,

some of the trade talk optimism eased off, sending prices

lower on the following Monday and Tuesday. In addition,

there were reports that a deeper cut on the part of OPEC-

plus at its upcoming meeting in early December looked

increasingly unlikely, which was also bearish for prices.

The most likely outcome at the meeting is thought to be

an extension of the current cuts of 1.2 mn bpd beyond

the cut-off of end-March 2020, and an emphasis on

tighter compliance. However, none of the price moves

were significant in the first 2 weeks of the month, with

NYMEX WTI crude trading in a narrow $56.20/bbl to

$57.24/bl range between 1 and 14 November.

The beginning of the third week, however, saw sharp

falls, with Brent dipping from $63.30/bbl on the Friday to

$60.91/bbl by end of trading on 19 November. The weak-

ness stemmed from more uncertainty over the trade

talks, along with a rise in US output. US refinery

through-put soaked up some of the additional crude, ris-

ing seasonally as autumn turnarounds were completed

and adding to product supply—dampening product

prices and crude crack spreads. There was then a

rebound midweek, driven by a smaller-than-expected

build in US crude inventories and heightened geopolitical

tensions in the Middle East—where Houthi rebel forces

in Yemen claimed to have shot down a Saudi Arabian jet.

Levels then picked up further at the end of the week on

more positive trade talk statements from the United

States, along with signs of slowing US shale oil drilling

and investment.

The final week saw further rises on the anticipated

trade deal resolution and surging pre-Thanksgiving stock

markets, with Brent moving above $64/bbl for the first

time since the Abqaiq attacks in mid-September. Levels

then eased back midweek on a bigger-than-expected US

crude and gasoline stock build. Analysts were expecting

US crude production to remain unchanged, but EIA data

showed US crude production climbing 100 000 bpd to

12.9 mn bpd, a new record high, which was also bearish.

Then, on the 28/29, sentiment weakened further on con-

cern that prospects for the United States/China trade deal

may have been damaged by legislation passed in the

United States that China sees as supportive of Hong Kong

democracy protesters, which saw prices dip back below

$63/bbl on 29 November.

How to cite this article: Month in brief. Oil and

Energy Trends. 2019;44:7. https://doi.org/10.1111/

oet.12746

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