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CCTV Script 15/05/19

— This is the script of CNBC's news report for China's CCTV on May 15, 2019, Wednesday.

The geopolitics of the Middle East draws lots of attention in the factors that affect oil price. The latest reports say two oil pumping stations in Saudi Arabia, close to the capital Riyadh, along the country's east-west pipeline; have been hit by drones carrying bombs

Houthis militants in Yemen have claimed responsibility for the drone strike; Saudi energy minister Ali al-Falih described the attack as an act of terrorism. The attack has raised tensions across the Persian gulf and sent a chill through oil markets.

We also saw an immediate reaction in the oil futures market, WTI light crude for June delivery rose 1.21 to settle at $61.78 a barrel, Brent for July delivery closed at $71.24, gained 1.44 percent.

Saudi Arabia has had to close operations on the pipeline, which carries about 700,000 barrels a day. That has some impact on the supply side of the oil market, which will depend on how long the pipeline is closed. But one risk factor hanging over the markets is that the direction of relations in the Middle East is likely to continue to affect the markets in the coming months as the US ratchets up sanctions on Iran.

That includes two Saudi oil tankers that were deliberately attacked off the coast of the United Arab Emirates on Sunday, There were no injuries or oil spills, but two tankers sustained significant damage, Iran's foreign ministry called the attack "disturbing and horrific" and called for a full investigation.

In addition to geopolitics, OPEC'S determined implementation of production cuts is another factor supporting oil prices, because of reduced Iranian supplies and the impact of the cut deal, cut rates of OPEC members who have to cut reached 150 percent in April, according to the monthly report released by the OPEC.

And then, in the market supply and demand factors, OPEC'S future cut attitude is a key. There is a month and a half away from holding the cut meeting; if Russia will join the deal is important. In addition, future global oil demand is weak, resulting in increased oil inventories and that makes some traders worried it could send oil prices lower, especially at a time of rising international trade friction.

For example, the latest data we got this morning was that the American petroleum institute said U.S. crude oil inventories unexpectedly increased by 8.6 million barrels in the week ended May 10, The figure was much higher than expected, meanwhile, gasoline and distillate stocks also showed an unexpected rise. The news also triggered a pullback in international oil prices this morning, it also suggests that uncertainty about the trading environment and global demand are indeed a risk factor for future oil prices.

Eric C. Robertsen

Managing director and head, global macro strategy and FX research. Standard Chartered

we are caught in a fairly significant type of war and if I think about our analysis of supply and demand prior to the geopolitical tensions and trade tensions, you know, our view of Brent is around 70 to 75 dollars range was representative of some sort of equilibrium, and the concerns on the geopolitics, i think have the potential to be quite a bit volatile.

However, at present, many analysts' forecast is still relatively optimistic, that the oil price still has the possibility of continuing to rise, many people continue to bullish oil prices.But the U.S. -Iran relationship, the geopolitics of the Middle East, the global trading environment, and supply and demand data will continue to balance each other in the oil market, and that may be a foregone conclusion that the oil market will not be stable. We will keep an eye on this issue.

Clarification: This report has been updated to reflect that the script was for May 15, 2019, Wednesday.