Published: Mon, August 12, 2019
Finance | By Kristine Clayton

Crude Oil Futures Rebound, End Sharply Higher

Crude Oil Futures Rebound, End Sharply Higher

Oil prices were generally down following a sluggish session opener Wednesday, with dark clouds ahead to the global markets courtesy of the US-China trade conflict seen by many market observers to get more complicated.

The U.S. surge has tapered off in recent months as shale drillers confront the geological challenges arising from rapid expansion, as well as pressure from shareholders seeking a better return on their investments.

The trade war between the United States and China and a broader decline in world economic growth are weakening the demand for oil and pushing prices down, the International Energy Agency said Friday.

China's yuan strengthened against the dollar and its exports unexpectedly returned to growth in July on improved global demand despite USA trade pressure.

For the week, September WTI crude oil settled at $54.50, down $1.16 or -2.08% and October Brent crude oil finished at $58.53, down $3.36 or -5.74%. USA crude oil inventories are about 2% above the five-year average for this time of year.

Oil extended losses after government data showed USA crude stockpiles rose last week by 2.4 million barrels.

The bank lowered its 2019 price outlook, mostly because of demand concerns, forecasting that global oil supplies will exceed consumption in the first half of next year.

The IEA cut its forecast for oil demand growth by 0.1 million barrels a day, to 1.1 million barrels this year and to 1.3 million barrels a day in 2020.

USA crude oil production will reach record level in 2019 and 2020, according to the EIA on Tuesday. Prices recovered after markets expected a surge in supply cuts by OPEC+ considering the downtrend in Crude prices. Of course, as escalation of tensions between the US and China could help cap gains or lead to another steep break, but you can't trade scared. "How long OPEC+ is willing to continue to manage production adds uncertainty", said Bjornar Tonhaugen, head of oil market analysis at Rystad Energy.

"The tentative oil rebound could be short-lived as the US-China trade dispute is providing no real reasons to be optimistic", said Edward Moya, senior market analyst at Oanda in NY.

"The stats were a major disappointment to the market with crude and product builds", said Andy Lipow, president of Lipow Oil Associates in Houston.

Saudi Arabia, the top producer in the Organization of Petroleum Exporting Countries, plans to keep oil exports below 7 million barrels a day next month as it allocates less crude than customers demand, according to unnamed officials from the kingdom.

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