Yahoo Finance Oil Price Fundamental Daily Forecast – Supply Disruption Needed to Avoid Slow Grind Lower
U.S. West Texas Intermediate and international benchmark Brent crude oil futures are trading flat early Monday. Putting a lid on prices are worries over future demand. Optimism over the outcome of the trade talks between the United States and China later in the week is helping to underpin prices.
At 0701 GMT, October WTI crude oil is trading $65.21, unchanged. October Brent futures are at $71.88, up $0.05 or +0.07%.
Traders seem to have forgotten about the impact of the Iranian sanctions on supply and are focusing primarily on demand. Among their concerns is recent disappointing industrial data out of China and weakness in emerging market economies.
In other news, U.S. energy companies kept the oil rig count unchanged at 869, according to the Baker Hughes energy firm during the week-ending August 17.
Money managers cut their net long U.S. crude futures and options positions to the lowest in nearly two months in the week to August 14, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
Forecast
U.S. WTI and Brent futures are expected to remain under pressure this week unless there is some bullish news on the supply side of the equation. At the start of the week, the main concerns for bullish traders centers on the notion that oversupply would weigh on the U.S. market and that trade disputes and slowing global economic growth would slow demand for oil.
One of the biggest concerns out there is that China’s demand numbers are coming down. This event is tied to a slowing of its GDP growth.
This darkening economic outlook on the back of trade tensions between the United States and China, and weakening emerging market currencies are weighing on growth and fuel consumption, according to traders.
The bearish news is starting to pile up and this is more than offsetting a slightly bullish tone set by the Iranian sanctions.
It’s a simple equation driving the price action at this time – demand seems to be slowing and supply looks to be rising. Further erosion in emerging market currencies and reports of growing supply this week could trigger a fresh round of selling pressure. I don’t think the emerging market situation will right itself immediately, which means the only factor that could spike prices higher will be an unexpected supply disruption.
This article was originally posted on FX Empire
