Daily basic oil price forecasts – Dovish Powell will provide support, but not enough to offset the concerns of the trade war

Brent crude oil futures in the United States of Western Texas, international and benchmark, are trading Friday in the backbone, shortly before the opening of the session and a keynote speech by the president of the Federal Reserve, Jerome Powell, who could set the tone of the market in the short term. Earlier in the session, markets were subject to demand-side pressures, but they were also supported by reports that key suppliers reduced supplies, resulting in near-flat trade.

At 10.25 GMT, October crude oil futures are trading at $ 55.25, down $ 0.11 or -0.20% and crude oil prices in December at $ 58.86 , down $ 0.09 or -0.15%.

We expect a quiet trade until 14:00 GMT when Powell delivers his speech at the Central Bank Symposium in Jackson Hole, Wyoming. It should provide clues about the Fed 's ability to cut interest rates a second time in two months, in order to revive the economy and avoid a global recession.

In simple terms, crude oil prices are likely to drop if Powell proves dovish by reiterating the Fed's "mid-cycle adjustment" speech. This refers to the central bank rate cut of 25 basis points in July, which policymakers say was not the beginning of a series of rate cuts.

To date, the markets expect a rate reduction of 25 basis points for September and up to four more over the next 12 months. Powell will have to adapt this assessment with clarity and conviction in order to convince the markets that the Fed is seriously considering extending the current expansion.

Crude prices are expected to rise today if Powell is bellicose and bears further rate cuts. However, gains could be limited as long as trade relations between the United States and China remain a concern. The International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) have reduced forecasts of demand growth because of the risks to the global economy of the trade war between the two economic powers .

Production cuts from OPEC and the strained tensions in the Middle East continue to provide support. The increase in production in the United States, however, is on the brink of offsetting reductions in production, although there is talk of future cuts in OPEC production.