The bullish oil market which had reached its 5 month high fell on Tuesday due to a sluggish economy and cautious market over concerns over a slowdown in the global economy. Crude prices are expected to reduce due to less fuel consumption globally.
The West Texas Intermediate, WTI crude oil futures which had reached it the 5-month peak of $64.77 for a barrel was down by 4 cents and was at $64.36. The benchmark Brent crude oil was at $79.04 down by 70 cents for a barrel.
International Energy Agency predicts oil market consolidate
The IEA which is a Paris based agency said that the demand for oil globally will reach 100 million barrel per day. The agency in its monthly report said, “Things are tightening up as we move into 2019, a possible risk to our forecast lies in some key emerging economies, partly due to currency depreciation versus the US dollar raising the cost of imported energy. In addition, there is a risk if growth from an escalation of trade disputes.”
The supply cuts by OPEC and the sanctions on Iran and Venezuela has also added to the pressure on prices. The IEA said, “the price range for Brent of $70-$80 for a barrel in place since April could be tested.”
Earlier in the week, the Brent had risen to $80 as the Iran sanctions on oil exports by the US spurred expectations about global oil market getting tighter. Production of oil in the US also fell to 10.9 million barrels per day a shortfall of 100,000 barrel per day and the US crude stocks also saw a fall its lowest in the last 3.5 years below the 5-year average as per data by the US Energy Information Administration.
Leading banks expect slow growth
Many leading banks including the Bank Of America are expecting a slow growth globally this year and predicts the Brent to reach $70 and the WTI to touch $59 per barrel this year despite the fears of recession receding due to the US job report data looking positive and the Chinese manufacturing on the road to recovery. The crude oil futures of Brent has increased by 40% and the WTI by 30% this year.
The short term outlook at least, for the time being, is tight despite the White House has restarted trade talks with China to find a resolution to the trade war on tariffs for $200 billion value of Chinese products.