Weekly Energy Recap: Market builds momentum

RIYADH: The oil market closed out 2019 on a bullish note with prices again on the upswing. The weekend air strikes in Baghdad triggered another surge in the market.
Beyond the geopolitical sphere, the year started with a fresh round of deeper OPEC+ cuts, with the group cutting a further 500,000 bpd on top of the earlier agreed 1.2 million bpd.
This coincided with a huge fall in US crude inventories in the last week of 2019 by some 7.8 million barrels.
Such developments have made for a very tight market with room for further appreciation, especially given the improving macroeconomic backdrop and signs of a thaw in US-China trade relations.
It is noteworthy that some US oil workers are leaving Iraq, even if Iraqi officials insist production will not be affected by attacks early Friday that killed a top Iranian military commander.
Still, it highlights an obvious supply risk and one wonders if the psychology of the market may shift from fears around a potential supply surplus to worries of a supply shortage and in turn, whether this will be enough to encourage upward momentum in US exploration and production spending this year.

Weekly Energy Recap: Market builds momentum