OPINION: A US-China trade deal has brought seasonal cheer to the crude market, with Brent blend rising comfortably above $65 per barrel — a good way to end the year for oil prices and the industry.
Washington and Beijing announced a “phase one” agreement that swapped US tariff reductions for increased farm exports.
Easing the friction between the two countries is just the boost that the global economy needs to keep growing into 2020.
But while it has increased the confidence of the energy and capital markets, it is far from the end of the story.
The agreement has averted an extra $160 billion in additional US tariffs on Chinese goods being imposed immediately.
But there is still plenty of suspicion between the two sides that could undermine further progress.
Robert Lighthizer, the US trade representative, said the deal was all but done while admitting many on his side would be sceptical about whether the Chinese would follow through on their commitments.
Critics such as American Nobel prize-winning economist, Paul Krugman, claims the ultimate gains are few.
“The truth is that there are almost never winners in trade wars — but there are losers. And however (US President Donald) Trump may try to spin this, he lost.”
Energy and equity analysts are just happy to see the two sides coming together as it removes some immediate uncertainty.
The oil markets have been in more buoyant form anyway following the decision by Opec to tighten production targets.
Russia and Opec have agreed to rein in output by a further 500,000 barrels per day in the first quarter of 2020 to try to push up prices.
Saudi Arabia was particularly keen on this strategy as it launched an initial public offering for state oil group Aramco.
In the end, of course, the Saudis raised more than $25 billion — the biggest equity sale the world has ever seen and showed Big Oil has life in it yet.
Crude prices have also been given ballast by the US Federal Reserve holding interest rates at their current level.
2019 was also a year when the fossil fuel industry also came under more ferocious pressure than ever over climate change
And there has been better news on a stuttering Chinese economy with faster growth in retail sales and factory output.
The price of crude see-sawed continually thoughout the year, starting January at $60, slumping quickly to $50 only to rise to near $75 and then fall heavily again last month.
Some of this was caused by geopolitics, not least Trump’s sanctions on Iranian oil exports.
Profits for the both the oil majors and the service companies have also been up and down.
Brighter news was provided by significant oil and gas finds for operators off Guyana, Russia’s Yamal Peninsula and the Gulf of Mexico.
There was even one of the biggest onshore finds ever in the UK and an exciting gas strike off Cyprus.
But 2019 was also a year when the fossil fuel industry came under more ferocious pressure than ever over climate change.
The latest UN talks in Madrid may have brought little progress but it was Greta Thunberg — not Trump — who was crowned Time magazine person of the year.
(This is an Upstream opinion article.)