Oil rises alongside equities, but weak OPEC outlook caps gains

Andrew Cummings
August 17, 2019

USA crude CLc1 fell 19 cents to $54.28 a barrel, having dropped 1.4% in the previous session and 3.3% on Wednesday.

An inverted Treasury yield curve is historically a reliable predictor of looming recessions.

The West Texas Intermediate for September delivery erased 0.76 dollar to settle at 54.47 US dollars a barrel on the New York Mercantile Exchange, and Brent crude for October delivery lost 1.25 dollars to close at 58.23 dollars a barrel on the London ICE Futures Exchange. China's on Thursday vowed to counter the latest US tariffs, but called on the United States to meet it halfway on a potential trade deal, as US President Donald Trump said any pact would have to be on America's terms.


"The rebound has a corrective look about it on thin volumes, rather than a beachhead for an impending rebound", Jeffrey Halley, senior market analyst at OANDA, said.

"OPEC cuts forecast for 2019 global oil demand growth to 1.10 million bpd (previous forecast 1.14 mbpd) on economic slowdown".

A Saudi official on August 8 indicated more steps may be coming, saying: "Saudi Arabia is committed to do whatever it takes to keep the market balanced next year".


Market participants were anxious that economic downturn would impact crude oil demand.

Gains are likely to be capped after a week of data releases including a surprise drop in industrial output growth in China to a more than 17-year low, along with a fall in exports that sent Germany's economy into reverse in the second quarter. Meanwhile, a second week of unexpected rises in USA crude inventories is adding to the pressure.

"OPEC killed the golden goose", said Bob Yawger, director of futures at Mizuho in NY.


In the report published, OPEC stated that "While the outlook for market fundamentals seems somewhat bearish for the rest of the year, given softening economic growth, ongoing global trade issues and slowing oil demand growth, it remains critical to closely monitor the supply/demand balance and assist market stability in the months ahead".

Other reports by iNewsToday

FOLLOW OUR NEWSPAPER