Americas News
Oil Market Roundup - Tuesday Week 2
Hopes of a break in the U.S./China trade war replaced the Organization of the Petroleum Exporting Countries' (OPEC) cutbacks as the reason for crude prices rising yet again on Tuesday, with West Texas Intermediate settling up $1.26 at $49.78 per barrel, and Brent climbing $1.39 to $58.72 per barrel.
The significance of this latest gain was voiced by Jeff Kilburg of TJM Institutional Services, who told CNBC that crude is now up 15 percent from its December low: "We are certainly a long, long way away from Christmas eve....at the end of the day sentiment has shifted so dramatically."
But as always with crude traders, their sentiment on Tuesday was motivated by the flimsiest of news, ie: Steven Winberg, a U.S. delegation member, declaring that the first face-to-face meetings between officials from the two countries are going well and will continue on Wednesday.
Still, despite warnings from observers that tensions could easily rekindle - along with ongoing concerns that a possible worldwide economic slowdown could negatively impact fuel consumption and demand - it may be that crude's winning streak since the beginning of the new year might continue, based again on ephemeral developments such as the expectation that U.S. inventories may have dropped by 3.3 million barrels in the latest week.
John Kilduff, founding partner at Again Capital, noted that If this is confirmed by government on Wednesday , it would send "a strong bullish signal" to the market.
But that is not to suggest the experts are abandoning their cautious outlook for crude anytime soon: S&P Global Ratings said it had lowered its average oil price forecasts for 2019 by $10 per barrel to $55 for Brent and $50 per barrel for WTI; Danny Huang, analyst for S&P, remarked, "Our lower oil price assumptions reflect slowing demand and rising supply globally."
All indications are that this supply will continue to grow: BP reported on Tuesday that it has discovered 1 billion barrels of crude at an existing oilfield in the Gulf of Mexico, along with two new offshore oil discoveries; the company also said it will spend $1.3 billion to develop a third phase of its Atlantis field off the coast of New Orleans.
Perhaps with long term market prospects in mind in addition to keeping a watchful eye on current numbers, Dan Deming, managing director of KKM Financial, told Bloomberg television that "Even though we're holding up in the $49 handle, it does feel right now that we're getting to a little [short term] top."
