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Window on the World – Edit: Sally Ismail
Mubasher: Oil prices stabilized in a temporary state of routine, with WTI and Brent remaining stuck at prices around $ 50 and $ 60 per barrel, respectively.
Supply disruptions in the Middle East have failed to support prices, while a continuing decline in production and exports from Iran and Venezuela has not occurred. Nor did crude oil prices rise, according to an badysis by Oil Price.
In an interview with CNBC, the oil badyst at Energy Associates said that " Geopolitical conditions It is an important engine of prices, however Concerns about global demand Crude is the main concern now.
OPEC supplies have fallen by 2 million barrels a day, a record for 10 years, but crude prices have hardly moved in the last month, he said.
And grown up Supply of American oil Over the past two years, several OPEC production cuts have been offset.
This issue has become a permanent problem for OPEC producers and their allies Sudden slowing of demand Add to their situation.
As a result, demand and economic concerns are at the center of traders' concerns. Business War Between China and the United States.
He adds that the scale of the impact of the trade war on Disabling Global Supply Chains Is the biggest concern for investors right now.
And failed Tensions in the Strait of Hormuz Pushing oil prices up now, according to a research note published by "Commerzbank".
Mainly because of concerns about demand, as the strong US economic growth could not dissipate it, according to the German bank.
But at the same time, "Chohan" thinks that the demand can be at the current minimum and that it can recover a little later, especially with the rush. Central banks facilitate monetary policy.
We generally expect that the Fed Reduce interest rates In a move that will be the first of its kind in a decade. (The US central bank has decided to cut interest by 25 basis points with the announcement of the end of the bank's budget reduction program next month.)
A reduction in interest rates can help rebadure markets, stimulate equities and maintain economic expansion, but this expansion could also be small.
The interest rate bidders argue that the fact that the central bank is reducing interest rates only a few months after its increases is exceptional and ultimately returns to Strong concerns about economic vulnerability.
Even worse, in case of recession or financial crisis Federal tools What should be used will be implemented.
However, the Short term impact Is considered positive for stocks and commodities, including crude oil.
To return to the real economy, recent data has been somewhat mixed, according to Bloomberg data. Additional slowdown in China In July.
She was informed United States Economic growth slowed in the second quarter to only 2.1%, a rate that remains good but well below the 3.1% recorded in the first quarter.
But the worst is that GDP growth figures From 2018 Has been adjusted downward by 3% to only 2.5%, raising questions about the strength of the US economy in recent years.
At the same time, it was L & # 39; inflation Higher than expected.
Chinese and American officials The resumption of trade negotiations This week, but the prospect of a big contract seems more and more unlikely.
Liu Legang, chief economist for China at Citigroup in Hong Kong, wrote in a memo China's economic outlook For the second half of this year, the uncertainties surrounding trade relations with the United States remain uncertain, limiting the reaction of economic decision-makers.
Although the Consumer spending This is a positive point because it is a solid performance, while a strong recession prevails in the manufacturing sector.
Another question is whether consumer spending can prove the persistence of its good performance in the future.
According to the Commerzbank note, recent figures show that private consumption was very strong in the second quarter.
However, market participants are not expecting to maintain this strong performance in terms of consumption in the coming quarters.
The investment bank said these concerns about the strength of the economy were being interpreted by recent speculators in the oil sector, which had significantly reduced their long long positions on Brent crude and WTI crude in the latest weekly report.
"If the economy does not slow down further, it could be the minimum," he said. Low current prices And there is little chance of a new downtrend. "
In the end, the oil market suffers from Limited stock From crude to the present time and do not aggravate the supply of crude.
The market may be insufficient, but fears, confusion and mixed signals about the global economy could limit price gains in the short term.
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