Americas News
Crude Soft, but OPEC Chief Says Demand Is Robust
The week for crude trading began somewhat glumly as persistent worries about the economic impact of the U.S./China trade war - specifically, the impact of U.S. president Donald Trump announcing new tariffs on about $200 billion on Chinese imports - caused Brent on Monday to fall 11 cents to $77.99 per barrel, and West Texas Intermediate to slip 8 cents to settle at $68.91 per barrel.
Stating the obvious, Phil Flynn, senior market analyst at Price Futures Group, declared, "The uncertainty surrounding the trade war is definitely something the market is concerned about in the short-term."
The other chief concern of traders - Trump's attempts to reduce Iranian crude exports to zero - is widely regarded to be a major influence to the market moving forward: Jim Ritterbusch, president of Ritterbusch and Associates, said in a note, "We believe that the full effect of the Iranian oil sanctions has yet to be seen and we feel that the next 5-6 week anticipatory phase of the official sanctions will associate with steady speculative buying interest."
For the record, Bank of America Merrill Lynch estimates that Iranian crude oil export loadings have declined by 580,000 barrels per day in the past three months.
However, Rick Perry, U.S. energy secretary, expressed confidence to Reuters that his country, Saudi Arabia, and Russia could raise global output in the next 18 months high enough to ward off any price spikes, and while this view has been heavily contested by analysts, another prominent figurehead of the energy sector was on hand to offer a cautiously optimistic outlook of the months ahead.
Mohammad Barkindo, secretary general for the Organization of the Petroleum Exporting Countries (OPEC), told Bloomberg that demand "is robust, despite some of the headwinds in the medium to long term," including an industry investment contraction of over 25 percent across the global supply chain.
Barkindo added his usual message that his cartel will "look forward" to continuing to work together to maintain a healthy supply and demand balance: "We would like to see oil continue to be the energy source of choice for the foreseeable future."
What is remarkable about Barkindo's comments is that they seem to directly contradict OPEC stating last week that tensions between the U.S. and China coupled with economic doldrums in many countries will cause demand growth this year and next to decline, albeit slightly compared to earlier predictions.
