Oil slips as demand outlook, trade dispute weigh

Cornelia Mascio
Agosto 13, 2019

But booming US shale oil production continues to chip away at efforts to limit the global supply overhang, weighing on prices.

West Texas Intermediate (WTI) futures settled at $54.93, up 43 cents.

"The swift reaction from Saudi Arabia will likely stabilize oil prices, but the oil price probably won't move much above $60 per barrel until there is evidence of progress in U.S".

Oil prices slipped on Tuesday, offsetting narrow gains in the previous session, as sluggish demand forecasts countered expectations that major producers would prop up oil prices by limiting crude oil output.

Oil futures rose sharply on Friday, making back-to-back gains after slumping into a bear market earlier in the week on growing concerns about the impact Trump's trade war is having on global economic activity and demand.

Analysts said in a sign that de-facto OPEC leader Saudi Arabia intends to support prices, state-run Saudi Aramco is ready to launch what could be the world's largest initial public offering. "China trade negotiations", Stephen Innes, managing partner at VM Markets Pte Ltd, said in a note.

He said fears of a global economic downturn were "exaggerated", and said global demand for crude should pick up in the second half, helping reduce the surplus in oil inventories gradually.

With weaker prospects for the global economy noted, the IEA cut its forecast for 2019 demand growth by 100,000 barrels a day to 1.1 million barrels a day, and its 2020 forecast rise was cut by 50,000 barrels a day to 1.3 million barrels a day.

Germany's Ifo economic institute said its quarterly survey of almost 1,200 experts in more than 110 countries showed that its measures for current conditions and economic expectations have both worsened in the third quarter. -China trade war have caused global oil demand to grow at its slowest pace since the financial crisis of 2008, the International Energy Agency (IEA) said on Friday.

"If OPEC cuts are merely extended through 2020, prices are going to fall further from current levels", Bernstein Energy said in a note on Monday.

Goldman Sachs Group Inc said on Sunday it no longer expects a trade deal between the world's two largest economies before the 2020 USA presidential election.

But booming USA shale oil output continues to chip away at efforts to limit the global supply overhang, weighing on prices. A stronger greenback makes the USD-denominated oil more expensive for the holders in foreign currencies.

On Friday, the U.S. Commodity Futures Trading Commission said hedge funds raised their net long positions in U.S. crude futures and options in the week to August 6. "The spec (ulator) community appears to want to trade these lows".

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