Futures Trading: Oil Falters on High Supply Demand
On Tuesday, oil prices waver in its lowest since January. At the same time, the increasing U.S. supply and stalling demand amid the economic slowdown kept markets under pressure.
Aside from that, Front-month Brent crude futures trading were down to $60.50. The international benchmark for oil prices was 13 cents or 0.2% lower in the last settlement.
Also, the U.S. West Texas Intermediate (WTI) crude futures trading were at $51.62 per barrel. It declined 6 cents or 0.1% in the last session’s close.
In addition to that, both Brent and WTI crashed in their lowest since January. And a boost in U.S. crude inventories and record production as the global economic slowdown begins to reach energy demand.
In the week to May 31, the U.S. crude oil production surged to a record of 124.4 million barrels per day (bpd). Moreover, it increased by 1.63 million bpd since May 2018, according to the Energy Information Administration (EIA).
And at the same time, the U.S. commercial crude oil rose by 6.8 million in the week to May 31. It is currently at 483.26 million barrels, its highest since July 2017.
Futures brokerage OANDA’s senior analyst Alfonso Esparza stated, “Rising U.S. production is more than offsetting the efforts from the OPEC+, and if we add the negative effect a trade war could have on energy demand the result is lower prices.”
OPEC+ is the Middle East-dominated producer club of the Organization of the Petroleum Exporting Countries including non-affiliated producers such as Russia. And to excite the market, they have been with restraining oil supply from the start of the year.
Global Economic Growth
Aside from oil, global economic growth last year took a dip late. But it started to rebound in early 2019. But now, an analyst warned about the threat in the growth again.
Furthermore, Morgan Stanley articulated, “Recent data suggests the nascent recovery has stalled amid trade tensions and a double sip is likely.”