Americas News
Crude Prices Mixed, But Croft Warns That Rally Could be Derailed by Sentiment
Economic fears were toe to toe with declining crude inventories in the minds of traders on Monday, and the result was a mixed market performance, with Brent climbing 23 cents to $67.26 per barrel and West Texas Intermediate settling 0.4 percent lower at $58.82 per barrel.
Phil Flynn, senior market analyst at Price Futures Group, speculated that fears of a global recession are abating, and "Now we're focusing on inventories ... and people aren't going to want to be short into the inventory report, which is probably going to show another big drawdown."
Flynn was referring to weekly figures on U.S. oil data that will be released on Tuesday by the American Petroleum Institute, and which many analysts - including Jim Ritterbusch, president of Ritterbusch and Associates - believe will show additional tightening but also a decline in global crude demand growth.
Worry about what could happen to the global economy has become so pervasive that even a normally bullish-minded analyst like Helima Croft, global head of commodity strategy for RBC Capital Markets, thinks the increasing perception of no headway being achieved in the U.S./China trade talks (a perception based purely on sentiment) could derail what is otherwise a remarkable oil rally for 2019.
She told CNBC television, "The bear case [for oil] is continuing fears about global demand - that is a really big headwind for a lot of people on oil: they're very concerned still about where trade talks go, they're very concerned about potentially weak numbers out of China; what does that mean for oil demand?
"So I really do think that the demand story is the big, looming negative headwind for oil; I think it's kind of the sum of all fears in terms of the oil market. "
Croft conceded, however, that the market will likely be strong for the near term: "The question is, what does [U.S. president] Donald Trump do in May: does he try to take more Iranian exports off the market, does he also try to impose secondary sanctions on Venezuela and force Venezuela's importers out of the market?
"I think those are the sort of bull stories for oil," and Croft added that WTI could rise to a high of $63.59 and a high of $73.50 for Brent.
