S&P Global Platts Expects Crude Oil To Reclaim 2019 High
The implementation of IMO 2020 could help oil prices move up to $75 per barrel, says S&P Global Platts’ Kang Wu.
S&P Global Platts expects crude oil price to reclaim 2019 high due to tighter market conditions and global shipping industry’s shift to a cleaner fuel.
The U.S.-China trade war slowed global economy, hurting oil demand. Brent Crude—the Asian benchmark for oil prices—declined almost 18 percent from its 2019 high of $74.57 per barrel.
“Brent crude is expected to rise as much as 22 percent in the remaining part of 2019, Kang Wu, head of analytics of Asia at S&P Global Platts, told BloombergQuint. “A tighter market from both demand and supply side coupled with the upcoming implementation of IMO 2020 [International Maritime Organisation] could help oil prices move up to $75 per barrel.”
The IMO 2020 caps the sulphur content in marine fuels to 0.5 percent.
“New rules around fuel specifications that will see the majority of shippers switch to cleaner marine fuel, known as IMO 2020, will see refiners needing lighter sweet crudes to produce more middle distillates and creating extra demand,” Kang Wu said.
While oil prices have declined of late, Wu said one must watch out for global demand indicators like the outcome of the meeting of Organisation of Petroleum Exporting Countries, readiness of IMO 2020 and the possibility of a trade deal between U.S. and China.