Crude could collapse if growth problems fizzled again



Oil

RAW OIL PRICE FORECAST – DISCUSSION POINTS:

  • Crude oil has climbed nearly 40% since the beginning of the year in response to the reduction in OPEC production in order to restore imbalances between supply and demand, new discounts remaining on the agenda
  • Downward revisions to global economic growth forecasts, however, continue to increase, threatening upward market sentiment and demand for crude oil
  • Take a look at this article on How to trade crude oil or check these Key facts about crude oil to broaden your commercial knowledge
  • Download the DailyFX Q2 Oil Forecast for our global vision

Looking for a technical point of view on crude oil? Check Weekly technical forecast of crude.

Crude oil continued to rise last week, with prices rising 0.8%. The unrest in Libya and the ongoing tensions in Venezuela have probably had a positive impact on crude, as both countries are major oil exporters. The conflict between the United States and Iran could also have contributed to rising oil prices given the risk of extending the restrictions imposed by President Trump on Iran.

PRICE GRAPH OF OIL GROSS: DAILY CALENDAR (FROM DECEMBER 28, 2018 TO APRIL 12, 2019)

Oil chart

The latest IEA report indicated a sharp drop in oil inventories compared with February, which is probably another factor contributing to higher oil prices. However, most of the above information is retrospective or already integrated with current prices.

On a less brilliant note, the The World Trade Organization recently reduced its economic growth forecast for 2019 by a staggering 1.1 percent. The International Monetary Fund then echoed its concerns about the further deterioration of the economy. update of the Outlook for the global economy and global financial stability which struck a warning tone and reduce GDP growth forecasts from 3.5% to 3.3%.

Although these developments regarding the slowdown in global growth seem not to have been noticed by risky assets and the oil market – strangely as was the case at the end of 2018 before the widespread sale. In addition, the announcement that Russia would refrain from prolonging oil production cuts alongside OPEC could also weigh on crude oil prices if this risk materializes.

That being said, the risk reduction proposal for bulls has become less and less attractive, with crude now exceeding $ 63 per barrel. The outlook for crude oil, however, remains neutral due to the coming seasonal effects, which generally push up oil prices, as well as uncertainty surrounding future OPEC supply cuts. .

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– Written by Rich Dvorak, Junior Analyst for DailyFX

– To follow @RichDvorakFX on Twitter

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