Oil prices have edged higher after the Organization of the Petroleum Exporting Countries (OPEC) forecast a supply deficit next year, offering a relief to the market.

Brent futures increased 28 cents to $64 a barrel, while West Texas Intermediate (WTI) crude edged up 12 cents at $58.88 a barrel, reported Reuters. OPEC said that it expects a small deficit in the oil market in 2020 and suggested that the market is tighter than previously expected.

This revised forecast marks a further retreat from a prediction of oversupply in 2020 due to slower production growth in the US. Meanwhile, US crude stockpiles rose unexpectedly last week, gaining more than 800,000 barrels, when compared to a Reuters poll, which forecasts a 2.8 million barrel decline.

Petroleum inventories also increased with gasoline stocks surging by more than five million barrels. Distillates also gained over four million barrels.

Reuters cited ING Economics as saying: “What made the release even more bearish was the fact that we also saw large stock builds for gasoline and distillate fuel oil.”

Investors are watching for the developments between the US and China with regard to signing an agreement to put an end to the trade war before the next round of US sanctions starts. It is expected that US President Donald Trump will discuss tariffs on Chinese goods set to be imposed on 15 December with top trade advisers.

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By GlobalData

AxiTrader Asia chief market strategist Stephen Innes said: “In the near-term, US-China trade remains the primary catalyst and the 500lb gorilla in the room.”