Economic concerns continue to cap crude's upward trajectory: File Image/Pixabay
Although public holidays in the U.S. and Britain limited trading participation on Monday, the usual geopolitical tensions plus the output cuts from the Organization of the Petroleum Exporting Countries (OPEC) contributed to crude prices rising by over 1 percent.
After a whopping 4.5 percent fall last week, Brent on Monday settled up $1.42 to $70.11 per barrel, a 2.07 percent rise; West Texas Intermediate settled up 59 cents, to $59.24 per barrel.
The tensions said to have caused these gains included Washington's announcement on Friday that it would deploy more troops to the Middle East in order to dissuade any aggression from Iran - however, JBC Energy pointed out that "with the U.S. and UK markets closed today and most of the geopolitical tension likely already priced in to the market, effects on crude prices may remain subdued."
Khaled al-Fadhel, oil minister, Kuwait
I believe the market is expected to be balanced during the second half of 2019
U.S. rig count is another factor that sway traders, and the number of working rigs targeting oil fell for the fifth time in six weeks - but Jeffrey Halley, a senior market analyst at Oanda Asia Pacific, observed that the impact of the lower rig count is likely to be temporary.
Also limiting crude gains was the ongoing concern over the global economy, and data on Monday showed that profits for Chinese industrial companies shrank in April; this was on the heels of data released on Friday showing that new orders for U.S.-made capital goods fell more than expected last month.
Meanwhile, the Xinhua news agency reported that China's automobile sales, a key driver of global oil demand growth, will reach around 28.1 million units this year, unchanged from 2018, when the country's car market contracted for the first time in more than two decades.
But while crude prices continue to be driven by sentiment derived from such disclosures, the actual state of the market with regards to the cold hard figures of supply and demand is something else entirely, and on that score Khaled al-Fadhel, oil minister for Kuwait, on Monday offered a somewhat more even-keeled market outlook.
He told media that while "We still have some more work to do, I believe the market is expected to be balanced during the second half of 2019, more towards the end of the year."