[ad_1]
The International Energy Agency (IEA) has announced that it will reduce its forecast of oil demand due to the slowdown in the global economy.
"China is experiencing its weakest economic growth over the last three decades, as have some of the advanced economies … If the global economy behaves even worse than we expect, then we may be able to revisit our numbers in the coming months come, "Fatih Birol, executive director of the IEA, told Reuters in an interview, just one week after the release of his report on the July oil market, in AIE said the demand would increase by 1.2 million barrels per day (MB / d) this year, the agency said it would reduce its forecast to 1.1 Mb / d. last year, the agency saw demand growth of 1.5 Mb / d by 2019.
Various data points have recently been negative, ranging from manufacturing activity to auto sales and trade volumes. However, demand is rising seasonally in the second half of the year, and many badysts are also seeing the global economy pick up a bit.
The Federal Reserve is expected to cut interest rates later this month, which could help stimulate the economy. Prior to this reduction, a number of rate reductions were observed around the world. On Thursday, the central banks of South Korea, Indonesia and South Africa all lowered interest rates. With interest rates and currencies all interconnected, rate cuts in one part of the world lead the way, or at least create more leeway for rate reductions elsewhere. "I think this will give a new boost to Asian central banks in their easing cycle," said Prakash Sakpal, an economist at ING Bank, at the Wall Street Journal. The trend towards a more accommodative monetary policy could be a drag on oil prices.
Meanwhile, oil prices have been on the rise, as sentiment between the United States and Iran has evolved, as well as trade negotiations between the United States and China. In recent weeks, we have seen a rise in geopolitical tensions in the Middle East and the prospect of easing tensions between the United States and China – both of which have contributed to the rise in crude oil.
Now, both go in the opposite direction. Although the United States has shot down an Iranian drone, Washington and Tehran seem ready to negotiate. On Thursday, Iran's Foreign Minister Javad Zarif "took a substantial step," as he has described, proposing permanent nuclear inspections in exchange for the lifting of US sanctions. It is not clear that this will lead to anything important, but both parties are again (somewhat indirectly) talking. This resulted in oil.
At the same time, tensions are do not easing between the United States and China. With both parties deadlocked and resigning for a long-term affair, the ensuing risk of economic deterioration also reduced oil prices.
Admittedly, these questions will probably continue to arouse a feeling of terror without a definite conclusion in the short term. "In the absence of these binary risks that would materialize, Brent could continue trading in a range of $ 60 to $ 67 / bbl," Bank of America Merrill Lynch said in a note.
The bank said the market could actually experience lower volatility due to lower speculative interest rates and the easing of monetary policy at many central banks. In addition, the oil market is relatively balanced at the present time in terms of inventories, with stocks around the five-year average. In other words, the upside and downside risks are relatively mitigated and the result could be a Brent rebound in the $ 60.
Yet, oil prices never stay calm for too long. While Iran and China are headlines for oil risk, Bank of America believes that a few other less publicized factors are equally important. The next IMO regulations on maritime fuels "are expected to increase marine oil demand by more than 1 million b / d in 1Q19, creating upside risks to demand and oil prices," he said. investment banking badysts. "On the other hand, the imminent rise in Permian pipeline capacity could offset a likely rebound in oil prices in 4Q19, if producers can fill them."
By Nick Cunningham from Oilprice.com
More from Reading Oilprice.com:
[ad_2]
Source link
