Oil prices hit three-month high

World Bank predicts prices will continue to increase after 2020

Oil has hit a three-month high, as progress is made towards phase one of a US-China trade deal.

In addition to the 18-month trade war, uncertainty around Brexit has had a negative impact on oil prices. However, with the Conservatives securing a convincing victory, and the UK now expected to leave Europe next month, some economic stability has been restored.

Trump has agreed to a limited trade agreement that will see the US reduce existing tariffs on $360bn (£270bn, €323bn) of goods. However, China has said phase one has yet to be completed.

Despite the hold up in Beijing, the news of a potential agreement has seen oil prices rally. Brent crude was up 0.7 per cent, to $64.63 a barrel, while West Texas Intermediate crude was up 0.5 per cent to $59.49 a barrel. This marks their highest price since September.

It’s been a turbulent time for the oil industry, with oil prices struggling for most of 2019. Its market price slumped to an average of $62 a barrel in the third quarter, from more than $75 a barrel a year ago.

In October BP reported a sharp fall in profits, blaming weaker global oil prices and the impact of Hurricane Barry, while the world’s highest-earning oil auction in Brazil was blighted by a crude spill in November.

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Tullow Oil also saw its share price plummet more than 70 per cent to 42.5p, after a disastrous production update. The price has rallied since to 69.17p.

Long-term oil price trends appear more positive. The World Bank anticipates that all three major benchmark oil prices – Brent, WTI and Dubai – will continue to increase after 2020 to reach $70 per barrel on average by 2030.

Investors will no doubt be keeping a close eye on the industry in 2020, to see if this bullish news marks the end of its bad run.

FURTHER READING: Oil price predictions for 2020 and beyond

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