From China to the United States: A Big Week of Developments

Posted in Top Headlines by on January 23, 2017

The world has been anticipating the inauguration of Donald Trump as the 45th President of the United States. Whether people like this idea doesn’t really matter for the oil industry at this point. All that matters is how he handles the economy in the United States, foreign policies and relationships that can impact oil.

A Big Non-Development in China

China was expected to launch its own oil futures contract but that plan has been halted. When the news of the possible Chinese oil futures contract came about, some people were worried because of the manner in which Beijing handles commodities trading. Another concern was the difficulty in trading yuan. China has quietly backed off of this plan, which was set to use a combination of crudes from China and the Middle East to set its prices.

President Trump’s Policies

We previously discussed how President Trump’s 100-day plan could give oil a big boost because he is planning to do away with some unfavorable policies. The new policies would favor fossil fuels in part by removing some of the restrictions on these fuels and removing the Obama-Clinton roadblocks that currently exist for projects like the Keystone Pipeline.

Another factor that is worth keeping an eye on is how President Trump boosts the economy. This is another one of his key campaign promises. An improved economy in the U.S. would likely mean an increased demand for oil. If you factor in the current OPEC and non-OPEC agreements to cut production, you can imagine how the price of oil would have been boosted because of the higher demand and lessened supply.

The coming months are going to be very telling with regard to the price of oil. Not only will it be interesting to see how the market reacts to President Trump’s policies, it will also be interesting to see how it reacts to the summer travel season and similar factors.

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