Oil unpredictable against the background of trade wars between the US and China
Lately the global oil market has become completely unpredictable. The baseline scenario of stabilization of prices, which was applied by the OPEC countries, is practically reduced to zero due to a dead end trade wars between the US and China.
Since the beginning of the week prices fell. This occurred against the backdrop of a new round of tariffs imposed by trump on Chinese goods, the contraction in China’s manufacturing PMI and the news that OPEC production increased in August. Prices, however, went back upstairs on Wednesday morning, when the shale WTI added 4% as a result of positive economic activity in the services sector of China.
Previously, prices had predictable seasonal fluctuations. They grew in the spring as oil traders had expected high demand for the summer. Once the demand reached a peak, prices fell in the fall and winter. Now this seasonality on the global oil market have not been observed.
In this context, the major participants in commodity market prefer to invest in gold, that is trying to minimize risks and not to be active in the oil market. On the other hand, the speculative part, which is characterized as a decentralized capital, trying to react to geopolitical news, while increasing the volatility.
Given that OPEC will hold a Ministerial meeting on 12 September in Abu Dhabi and prior to that the market will be extremely unstable and highly which depends both on the geopolitical factor and from published data from the us energy departments.
Today will be known important information on crude oil inventories from EIA, energy Information Agency. It may in the moment impact on the market. Yesterday published data from the American petroleum Institute (API) proved to be positive: 0,401 million barrels against the negative forecast -11,100 million Today, data is likely to remain in positive territory, which confirms the growth of stocks of crude oil in the United States.
However, positive in terms of geopolitics could reverse the published data and to play the situation. The slightest hint of a weakening of the trade conflict will let oil prices to make a breakthrough. So, Brent could reach $62 per barrel and WTI rise above $57,87 per barrel. Otherwise, we should expect a fall of 1.8% on both grades of oil.
“International financial center”