Yahoo Finance Oil Price Fundamental Daily Forecast – Supported by OPEC-led Production Cuts, Capped by Concerns Over Weaker Demand
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower early Friday, erasing some of yesterday’s more than 2-percent gains. The catalyst behind today’s selling pressure is weaker than expected economic reports from China. These reports are raising concerns over future demand from the world’s second-largest economy.
At 0948 GMT, February WTI crude oil is trading $52.71, down $0.11 or -0.21% and February Brent crude oil is at $61.21, down $0.24 or -0.39%.
Earlier today, the Chinese government released a slew of economic data including reports on retail sales and industrial output growth. The country reported some of the slowest retail sales and industrial output growth in years for November. This news prompted crude oil traders to take profits after yesterday’s gains as it raised concerns over the impact of the country’s trade dispute with the United States over future Chinese oil demand.
Additionally, it was reported that oil refinery throughput in November in China fell from October, which was the second-highest month on record, suggesting an easing in Chinese oil demand, through run were 2.9 percent higher than a year earlier.
Also in China, refineries processed 50.46 million tonnes of crude oil last month, or 12.28 million bpd, up 2.9 percent from the same month last year, the National Bureau of Statistics reported. That figure is down from October and from the record of 12.49 million bpd reported in September. Finally, for the first 11 months of the year, refinery output gained 7.2 percent to 554.48 million tonnes, or 12.12 million bpd, on track for an annual record.
Forecast
Barring any major changes in the supply/demand situation, the direction of the WTI futures contract today is likely to be determined by trader reaction to the 50% level at $52.19. The pivot for the Brent futures contract is $60.75.
Straddling these levels will indicate investor indecision. It will also indicate that last week’s decision by the OPEC-led group to trim production by 1.2 million barrels per day is underpinning the markets. Capping the market is concerns about futures demand and this is likely to be an issue until the U.S-China trade dispute is settled.
We could be looking a possibly weeks of consolidation until either side budges. However, a downside bias may develop if U.S. production continues to increase. Furthermore, weakness and volatility in U.S. equity markets could also put pressure on prices.
This article was originally posted on FX Empire
