Knight Bridge Investment Consultants Limited – Global Oil Update – Prices Seen Easing
Brent crude oil prices eased away from 2019 highs on Tuesday on caution that economic growth may dent fuel demand this year, although supply cuts led by producer cartel OPEC still meant markets were relatively tight.
U.S. West Texas Intermediate (WTI) crude futures were at $55.71 per barrel. While that was up 12 cents from their last settlement, it was below the $56.33 2019 high from the previous day.
Traders said the slight downward correction was driven by concerns about the health of the global economy this year.
Knight Bridge analyst Graham Green noted that the Sino-American trade dispute was hurting economic growth globally.
"Addressing global trade tensions is key for improving the economic outlook," he said in a note to clients.
China's vice premier and chief trade negotiator, Liu He, and U.S. Trade Representative Robert Lighthizer lead a round of trade talks this week in Washington.
Considering the economic outlook and supply and demand balances, the company said it expects Brent prices to average between $50 and $70 per barrel, "anchored around $60."
Despite some caution around trade, global oil markets remain relatively tight because of supply cuts led by the Middle East dominated Organization of the Petroleum Exporting Countries (OPEC), with top crude exporter Saudi Arabia cutting the most.
Saudi seaborne crude exports fell in the first half of February, with departures standing at 6.204 million barrels per day (bpd), a 1.341 million bpd decline on the previous month and 0.91 million bpd decline on the year.
Further providing oil markets with support are U.S. sanctions against petroleum exporters Iran and Venezuela.
Venezuela is a major crude supplier to U.S. refineries while Iran is a key exporter to major demand centers in Asia, especially China and India.
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