After the attack on two tankers in the Gulf of Oman, the crude oil prices rallied as much as 4.5 per cent on Thursday ahead of OPEC meeting to be held next week when the member countries would decide on extending the oil output cut agreement.
After the attack on two tankers in the Gulf of Oman, the crude oil prices rallied as much as 4.5 per cent on Thursday ahead of OPEC meeting to be held next week when the member countries would decide on extending the oil output cut agreement. However, today the crude oil prices ended flat amid fears that the global trade disputes would adversely impact the demand for the oil.
Today, the international benchmark for oil, Brent crude futures were down 14 cents at $61.17 a barrel at 0846 GMT, having settled up 2.2% on Thursday. The US West Texas Intermediate crude futures were also down 28 cents at $52 a barrel. WTI also settled higher by 2.2% in the last session.
The escalating trade tensions between the two economic giants the US and China, which are the largest consumers of oil, don’t augur well for the crude demand. The International Energy Agency cut its demand growth forecast for 2019 by 100,000 barrels per day (bpd) to 1.2 million bpd, due to exacerbating prospects for global trade.
“The fundamentals for crude oil are still negative. For the last 40 weeks, we are seeing a rise in crude inventory and we saw a drop in crude oil prices. The crude oil is not able to break the $60 per barrel since last 10-12 days. But geopolitical tensions and trade tensions have been showing support for the prices which is just a technical bounce. OPEC meet is important and it is expected that the production cut can be extended beyond June. If the cut happens then that may support the prices. The overall long-term perspective is down for crude oil. The upside is limited for the crude oil prices,” Ajay Kedia, Director with Kedia Commodity told Financial Express Online.
The geopolitical risks have given support to the crude oil prices but the experts say that the recent spike in oil prices had no fundamental backing and expect the market to be negative. The market is getting nervous about demand concerns on account of a global slowdown and increase in US inventory.
“For two to three weeks the market may get bit positive on the expectations that OPEC output deal might happen but from a long term perspective, I expect the market to be bearish because demand concerns are completely overpowering the supply concerns,” Shweta Shah, Crude Analyst with Motilal Oswal told Financial Express Online.