Fears and uncertainty regarding global growth pressing oil

Market Trends - 10/10/2019


According to Helima Croft an expert strategist geopolitical uncertainties, trade pressures and the possible shock on crude interest are more important for oil exchanges than recent strikes on energy base in the Middle East. On Wednesday Croft informed CNBC “We still have huge fears about demand. That is what’s weighing on this market.”





According to Helima Croft an expert strategist geopolitical
uncertainties, trade pressures and the possible shock on crude interest are
more important for oil exchanges than recent strikes on energy base in the
Middle East. On Wednesday Croft informed CNBC “We still have huge fears about
demand. That is what’s weighing on this market.”





“The big turn in this market this year was the resumption of
the trade war (between the U.S. and China) and as long as we have these trade
war fears hanging over this market, OPEC can do what they can in terms of
production cuts but the question is: Can you move this market higher?”





The oil keeps falling for the last 48-hours due to new
pressures between the U.S and China. This happened before high level talks
between the world’s two biggest economies, arranged for Tomorrow. The U.S. West
Texas Intermediate (WTI) was exchanging at $52.48 per barrel while Benchmark
Brent crude futures were at $58.08 per barrel.





Over the last year, Brent crude fell from its top of nearly
$84 per barrel due to concerns of an ongoing increase of supply and pressing
demand. A previous situation accelerated a sharp drop in oil prices from
mid-2014 to 2016. Oil maintained its levels mostly because of OPEC and non-OPEC
producers who agreed to a deal back in 2016 to restrict stock.





The next important gathering of OPEC and non-OPEC producers
is planned to take place near Christmas. Croft stated that current oil levels
are not ideal for the members of the oil-producing organization she said,
“Prices are nowhere where the producers want at this point. Many producers have
break-even prices for their fiscal budgets (that are) in the $80s. So the
current price environment is not good for most of the OPEC countries,” “The
question is does OPEC apply a bigger collective cut and does Saudi Arabia, the
driver of OPEC policy, take more on their back, or are they able to get better
compliance (from other producers to cut output)?”


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