Oil Inventory Report: Oil Declines During Economic Slowdown
Oil market dips as economic slowdown pulls it down. Even with the cuts supply led by the producing club OPEC and the United States sanctions contradicting to Venezuela, such support might not bring it back up.
The United States West Texas Intermediate crude futures with a $52.20 a barrel with a 0351 GMT also declines. It goes down at about 44 cents equivalent to a 0.8 percent loss comparing to their last arrangement. The U.S. West Texas Intermediate declines at about 2.5 percent compared to their last session.
The International Brent crude oil futures also decline by 44 cents. It is now amounting at $61.19 a barrel. An obvious 1.7 percent down when compared to their last sessions.
U.S. and China Trade Conflicts
The financial markets including crude oil futures are the concerns of the traders as of now. Mainly because of conflicts between the United States and China still unfinished sinking the global economic growth possibilities.
On Thursday, United States President Donald Trump says he didn’t plan to assemble with Chinese President Xi Jinping before a March 1 deadline. It was set by both countries to strike a trade deal.
Without any agreement between these two countries with big economies, President Trump threats to increase U.S. tariff for every Chinese import. Another set of talk is scheduled next week which will happen in Beijing.
Edward Moya, a market analyst at futures brokerage Oanda says, “Crude prices returned to the lows of the week as slower growth prospects…could signal a return (of reasons) for inventories to rise.”
The European Commission on Thursday sharply cuts their forecast for eurozone economic growth. It expects a global trade tension with an array of challenges in domestics.
European Commission says the growth for the year 2019 might slow down to a 1.3 percent from a 1.9 percent during 2018. Then before rebounding towards the year 2020, it’ll go to 1.6 percent.
Even so, traders believe crude prices are preventing a further fall, which is led by the Organization of the Petroleum Exporting Countries (OPEC). It was utilized during late 2018 to tighten the market and driving prices up.
Crude Export From Saudi Arabia
Saudi Arabia, as the worlds biggest crude exporter, offered to cut outputs in January at about 400,000 barrels a day to a 10.24 million barrels a day. All are in accordance with OPEC sources.
It now puts Saudi Arabia crude production at about 1.7 million barrels a day below the United States. The United States has been beating about 11.9 barrels a day during late 2018 and in early 2019. That was up by more than two million barrel a day compared with the year earlier.
In late January, there’s also a risk to supply coming from Venezuela upon implementation of U.S. sanctions contradicting the OPEC member’s petroleum industry. Estimation from analysts shows that it could knock out 3000,000 to 500,000 barrels a day of exports. But for now, the sanctions effects on the international oil markets are limited.
Norbert Rucker, head commodity research at Swiss bank Julius Baer says, “The (Venezuela) disruption overall seems manageable both for the U.S. and the global market.” And he added, “The oil market sits on a comfortable cushion of supply.”