By Srinivas Chowdary Sunkara // petrobazaar // 20th August, 2019.
Brent oil prices rose $1.1 to $59.74 while WTI oil prices gained $1.34 to $56.21 a barrel last night. Shanghai crude oil main contract futures went up 10 Yuan or 2.41% to 428.8 Yuan/barrel where as MCX crude futures closed Rs.126 up at Rs.4022 yesterday. Brent premium narrowed to $3.53 to WTI during yesterday's session.
The global crude benchmark index surged around 2% yesterday after the oil market tried to price in the geopolitical premium following the weekend drone attacks on KSA. Analysts are in the opinion that the current upside trend can not be sustained until and unless there is loss of production. Equity rally following the expectation that the global economies will take action to counteract slowing growth, helped the oil prices. There seems to be a softening of the trade war tensions between US and Shanghai also extended some support.
Turning to monthly reports, OPEC tried to mitigate the demand side determinants as this report stated that China will lead demand growth. How come? since the China is expected to shrink below 6% to 5.8% in 2020 and their manufacturing index has hit a 17 year low which diminishes the demand for energy. On the supply side, Saudi is putting all efforts to push oil price back ahead of IPO by losing market share. In this losing game, North America stood as a net gainer. Asian markets are opened with gap down today and API estimates are due later today which may spur some volatility. Good day.
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