US-China trade talks again take centre stage in oil market

Posted 11 February, 2019

Following the Friday trading session, the Brent oil prices managed to slightly regain positions. However, the overall figures showed that the last week brought some 1% decline. The quotes saw some support at the $61/bbl handle and improved to $62/bbl. Despite the increase, the oil market has remained shaky and started this week with a price decline. The current price stays near $61.80/bbl.

The US-China trade conflict enters the picture again, bringing new downward risks for the oil market. Specifically, the parties will hold a meeting in the near term, but there is a chance that Washington and Beijing will fail to come to terms before March starts. In this situation, investors are getting even more nervous being already affected by signs of slower economic growth in the world. This week the market will be focused on the trade and economic issues.

At the same time, a monthly OPEC report and oil report by the International Energy Agency will be the spotlight this week as well. Both reports are expected in the first half of the week. In fact, the US oil reserves report can somewhat affect pricing, especially in case of higher reserves and production volumes.

According to the data released by Baker Hughes, the number of active rigs in the USA rose by 7 to 854 units last week. 

As for political factors, investors are yet to react to the Venezuelan sanctions. However, this factor can affect futures in the long run, particularly on the expiration of the softer import terms for Iranian oil buying.

In the short run, the Brent prices will remain based on the stock markets and macroeconomics. The main event for this week – US-China trade talks. The price still can fall below the $60 handle.

Previous forecast

11 February, 2019 17:51

← Market still expect higher interest rate from ECB in 2019

Although the European Central Bank adopted a more flexible approach and the euro-area economy continued posting slower upturn, the market participants keep on believing that the regulator will eventually dare to raise the interest rate until the end of the year. The regional environment is only one of the threats to the euro. At the start of the week, the euro to US dollar rate touched a bottom of 1.13 recorded last time on January 24. Attempts to regain positions are fruitless so far, the market remains bearish...

Market still expect higher interest rate from ECB in 2019

Next forecast

08 February, 2019 16:32

Global economic situation prevents oil price from strengthening →

The price for oil showed another attempt to rise on Thursday but entailed new profit taking in the market. As a result, the quotes fell down to the $60/bbl handle. However, the prices for Brent oil have managed to restore positions by Friday, hitting the $61/bbl handle. Despite the increase, daily decline remained heavy. Oil quotes that have already shown instability face pressure from the macroeconomic signals. The market environment generally remained the same with prevailing uncertainties and fears. As a result, traders stay on pins and needles taking measures to prevent the price rise. In the near term, it is still possible that oil prices may fall down below $61/bbl again.

Global economic situation prevents oil price from strengthening
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