Under tension between US-China and the ongoing pandemic virus has led to a fall in oil prices by 1% although it has a positive impact on OPEC deal production. The price of oil fell varies Brent crude oil settled at %48.79 per barrel fell 46 cents or 0.9% meanwhile the US crude oil fell to $45.76 per barrel or fell 50 cents or 1.1%.
The oil prices have been under pressure due to the exclusive reports from Reuters that report the United States was prepared to impose sanctions on at least a dozen official Chinese due to their involvement in Beijing’s disqualification of the elected opposition legislator in Hong Kong. In Hong Kong, thousands of people are rallying against Beijing’s plan to impose National Security Laws in the city that returned to China in 1997. Police use water cannons and tears to disperse those people and react to controversy internationally.
For the last years, the tension between the United States and China has weighed the price of oil. The United States and China ties have been worsening since the coronavirus outbreak. Both of the presidents have the debate over the outbreak included the lack of transparency and accusation to cover up the virus until it creates a pandemic over the world. Washington blames Beijing and says that the pandemic could be stopped at the source and also accuses of hiding the information to the world about the virus. The clash of the superpowers country also related to human rights, Hong Kong government, and trade war, and also US’s support to Taiwan. The increasing tension between the US and China has added more anxiety to the market.
China is one of the world’s largest importers of crude oil and supports the rising of crude prices this year. During 11 months of the year, China has imported 503.92 million tonnes or 10.98 million barrels per day. This count has risen 9.5% from the previous year. In November, the General Administration of Customs reported that the oil import has risen from the prior month of the countries.
China also plays an important role in the global economy. China is a country that becomes one of the fastest-growing countries. China has support for the global economy including opportunities in several aspects such as investment, international cooperation, trade, and more that support the prosperity and stability in the world.
In the United States, gasoline consumption has fallen into the lowest rank in the Thanksgiving holiday for more than 20 years. OPIS reported that this condition happens because fewer Americans do travel during the Corona pandemic. The United States has totaled more than 16.6 million cases with more than 301.000 death cases. The United States is a country that has the highest number of coronavirus cases. Donald Trump as well as his wife, Melania are tested positive for covid just weeks before the US election day. Both get tested after the senior politics Aiden wound gets positive.
Coronavirus cases surge globally and have forced a series of lockdowns in new regulations to include tight restrictions measures that regulate in Germany, United States, South Korea, and California. The coronavirus second wave is not an impossible matter and policy on lockdown and restriction can send crude oils to fall back to the lower rank fast. This is global knowledge that the market knows well. In 2020, oil prices will fall by 40% so far.
After OPEC+, both oil contracts were gained. OPEC+ are members of the Organization of the Petroleum Exporting Countries and their allies. They agree to reduce the oil production in January and continue limitation to immense existing supply curbs. The production reduces expected 7.2 million BPD or 7% from global demand in January. It has cut 500.000 BPD from the current. The existing cuts are predicted will continue until March.
With the OPC deal agreed, now traders are looking back to the fundamentals of trading, supply, and demand. They are forced to do this as it does not look good in the short term.
Demand for global oil has been slumped by 30% because the coronavirus pandemic has restricted the movement through the world. The decreasing rate in oil demand has led to growing oil inventories globally.
Vaccine optimism hopefully will increase the global economic sentiment, including the price of oil. The expectation of vaccines helps to offset the fears of coronavirus cases. Vaccine euphoria has started and the vaccine program is expected to be able to awaken the market and crude oil prices.