By Xinhua writers Liu Liwei, Gao Lu
Despite the losses of the last day of 2019, oil prices posted the biggest annual gains since 2016, to some extent driven by the phase one economic and trade agreement between the United States and China, as well as the consensus among the Organization of the Petroleum Exporting Countries (OPEC) and its allies for further output cuts.
The U.S. benchmark WTI notched up more than 34 percent in 2019, the strongest annual performance since 2016, while the global benchmark Brent crude advanced nearly 23 percent. Both indexes are below their peak levels in April when the growth of WTI exceeded 40 percent, and Brent crude went over 30 percent.
Oil prices showed uptrend momentum in the first months of 2019 due to some geopolitical concerns and the OPEC's decision of production cut. Then the momentum slowed down mainly because of concerns over the downturn in demand for crude oil.
Oil prices have been on track for stronger performance recently amid increasing prospects for easing trade relations between the United States and China, as well as an agreement between OPEC and its allied producers for further supply cuts.
However, the downside risk remains. Analysts have warned of downtrend risk as there are mounting challenges in the energy sector, such as climate change and electric vehicles advance.
Some argue that based on authentic data, the oil sector may be entering the final decade of growth. For instance, Shell and others estimate the global oil demand could peak before 2030.
Analysts also doubt that the U.S. shale boom will be sustainable into another decade after a decade of ups and downs.
According to Haynes and Boone, an international corporate law firm headquartered in the U.S. state of Texas, a grand total of 50 energy companies filed for bankruptcy during the first nine months of 2019, including over 30 oil and gas producers, more than that for the whole of 2018.
The biggest oil and gas bankruptcy in 2019 involved EP Energy. The Houston-based oil and gas producer filed for bankruptcy protection in October.
In addition, the global oil inventories level is an important factor to affect oil prices in the near future.
In its year-end Short-Term Energy Outlook released in December 2019, the U.S. Energy Information Administration (EIA) forecast that Brent spot prices would be lower on average in 2020 than in 2019 due to the forecast of rising global oil inventories, particularly in the first half of next year.
EIA forecast Brent spot prices would average 61 U.S. dollars per barrel in 2020, down from the 2019 average of 64 dollars per barrel, while WTI prices would average 5.50 dollars per barrel less than Brent prices in 2020.
Meanwhile, China, one of the world's largest importer of crude oil, recently unveiled a new exchange for small business owners known as the GH&M (Guangdong-Hong Kong-Macao) Greater Bay Area International Energy Transaction Center. Observers believe the platform will serve as a matchmaker by introducing all players to each other and increase their access to resources and give developing nations cheaper prices.
Registered in Hong Kong, the center was officially launched in November during the 2019 China International Energy Conference in Beijing. According to Gong Jialong, chairman of the center, the establishment of the platform is a key measure that will serve the sustainable development of energy industry in markets involved in the Belt and Road Initiative, and it will be an important carrier for China to participate in the global energy pricing system.
"We aim to build an open, diversified, fair and efficient international energy exchange platform for large energy companies and the rest 70 percent small- and medium-sized energy firms," he said.
Gong, also CEO of GH&M Greater Bay Area International Energy Exchange Co. Ltd., one of the partners of the center, told Xinhua in May 2019 when he visited Houston that China-U.S. cooperation in energy has great potential, because "China is the world's largest energy consumer and U.S. is one of the largest producers."
Editor:Cherie
