Oil Prices Falter Amid Economic Fears
West Texas Intermediate (WTI) and Brent crude oil prices declined Tuesday as the market continues to contemplate abundant oil supplies and fears about the economy’s direction.
The November WTI contract price shed 12 cents Tuesday to settle at $52.63 per barrel. It traded within a range from $51.81 to $53.27.
Also edging downward Tuesday was December Brent, which lost 11 cents to close at $58.24 per barrel.
“The good news for oil bulls is that there’s a good chance for the market to rebound each time it approaches the $50 per barrel support,” Barani Krishnan, senior commodities analyst at Investing.com, told Rigzone. “The bad news is there aren’t any events in the immediate term that could spur the market to build on from those rebounds. The next OPEC meeting isn’t until December, for Saudi Arabia and its ally Russia to try and psyche the market up for a new round of cuts or higher prices.”
Krishnan also commented that, barring another supply shock on the order of the Sept. 14 attack on major Saudi oil assets, little reason exists to fear a crude shortage.
“On the contrary, the world is virtually swimming in oil – if some market pessimists are to be believed – a hypothesis that supports lower prices, rather than higher ones,” said Krishnan. “And then, there’s this growing fear about a U.S. recession, reinforced by last week’s dismal data on both manufacturing and service.”
The economic concerns tie into what Krishnan calls “the biggest puzzle of all”: the ongoing matter of trade negotiations between the United States and China. On Monday, the U.S. Department of Commerce reported that it will add eight Chinese firms to its “Entity List” of entities implicated in human rights violations and abuses.
“Donald Trump’s vacillation on all matters seems to have reached epic proportions on China alone, with the President holding out one hand to shake and the other ready to swat,” said Krishnan. “Today’s White House gift to Wall Street are capital flow limits into China and the blacklisting of more Chinese firms, while the delegation from Beijing starts packing its backs for home a day earlier than planned. Oil will be lucky to remain just range-bound from here.”
Unlike crude oil, reformulated gasoline (RBOB) finished the day higher. November RBOB gained one cent to settle at $1.58 per gallon.
Like crude oil, Henry Hub natural gas futures retreated during Tuesday’s session. The November gas marker settled at $2.29, reflecting a 1.5-cent decline.
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