Oil set for third weekly gain on brighter economic outlook

London — Oil prices were set for a third straight weekly gain despite a Friday fall after easing US-China trade tensions lifted business confidence and the outlook for global economic growth.

Brent was down 28c at $66.26 a barrel by 11.16am GMT, equivalent to a weekly rise of about 1.6%, while US West Texas Intermediate (WTI) crude was down 29c at $60.89 a barrel, a gain of about 1.4% on the week.

Progress in the trade dispute between the world’s two biggest oil consumers has raised expectations of higher energy demand in 2020.

On Thursday, China announced a list of import tariff exemptions for six oil and chemical products from the US, days after Washington and Beijing said an interim trade deal is set to be signed in January.

Most major economies have likely averted recession for now but growth will remain subdued in 2020, Reuters polls forecast.

“The energy sector as a whole looks set to end 2019 with a solid year-on-year gain. This is due solely to the oil market,” Barbara Lambrecht, an analyst at Commerzbank, said.

Brent is 23% more expensive than it was at the start of the year. Oil prices fell almost 20% in 2018.

UBS lifted its oil price forecast for 2020 but also expects the oil market to be oversupplied by 0.3-million barrels per day (bpd) in 2020.

“Our end-of-quarter Brent price forecasts are $60 a barrel for the first quarter of 2020; and $62 a barrel, $64, and $64 again for the following three quarters,” UBS analysts Giovanni Staunovo and Dominic Schnider said in a note.

UBS’s previous forecast for the four quarters of 2020 were $58, $55, $58, $60 a barrel, respectively.

A US weekly drilling report by energy services firm Baker Hughes is due on Friday. Analysts say an expected fall in US drilling activity should support oil prices.

Meanwhile, oil sector workers in France could decide on Friday whether to halt production at refineries to scale up a protest.

Reuters