Oil Price Fundamental Daily Forecast – 2019 China Imports Rise 9.5%

China has pledged to buy more than $50 billion in energy supplies from the United States over the next two years, according to a source briefed on the trade deal.
James Hyerczyk
Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Tuesday Shortly before the regular session opening. The markets were pressured earlier in the session, but turned around when the selling volume dried up and traders turned bid.

There weren’t any major developments on the fundamental side, per se, but technical factors may have played a role in the rebound as both U.S. and Brent crude tested important technical support zones.

At 12:44 GMT, March WTI crude oil is trading $58.54, up $0.46 or +0.79% and March Brent crude oil is at $64.76, up $0.56 or +0.87%.

Traders are saying the early rally is being fueled by the hope that the U.S.-China trade deal, scheduled to be signed on Wednesday, leads to increased demand growth. China has pledged to buy more than $50 billion in energy supplies from the United States over the next two years, according to a source briefed on the trade deal.

Oil Demand to Pick Up Again

“The U.S.-Chinese trade war had a tangible impact on global oil demand growth last year, which reached 890,000 barrels per day compared with initial forecasts of 1.5 million bpd, Tamas Varga, an analyst at PVM brokerage said in a note.

“This year, however, the pace is expected to pick up again and is to average at 1.25 million bpd…In case of a trade deal upward revisions can be anticipated,” Vargas said.

China Imports Up

Despite the trade war, data showed China’s crude oil imports in 2019 surged 9.5% from a year earlier, setting a record for a 17th straight year, as demand growth from refineries built last year propelled purchases by the world’s top importer.

For all of 2019, the world’s top crude buyer imported 506 million tonnes, or 10.12 million bpd, some 9.5% above the 2018 level.

December imports were also up, boosted by private refiners rushing to use up import quotas they were granted for the whole year, while state plants stocked up on oil before the holiday shutdown that accompanies China’s Lunar New Year festival, which falls in late January this year.

Daily Forecast

Late in the session, prices are likely to be influenced by a weekly industry report. At 21:30 GMT, the American Petroleum Institute (API) will release its weekly inventories report.

According to a preliminary Reuters poll, crude oil inventories were expected to have fallen last week. However, other polls show a 1.5 million barrel build. This being said, traders should look for volatility with the release of the number.

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