Will the oil price forecast fall after Brent crude dips below $40?

Will the oil price forecast fall after Brent crude dips below $40?

Worldwide benchmark Brent and West Texas Intermediate (WTI) extended losses on Friday after a surprise rise in U.S. crude inventories triggered concerns over a supply glut in the global oil market already rattled by Covid-19.

"US crude oil refinery inputs averaged 12.8 million barrels per day during the week ending September 4, 2020, which was 1.1 million barrels per day less than the previous week's average".

The world's top oil exporter Saudi Arabia cut the October official selling price for Arab Light crude it sells to Asia by the biggest margin since May.

The global health crisis continues to flare with coronavirus cases rising in India, Great Britain, Spain and several parts of the United States. The outbreaks are threatening to slow a global economic recovery and reduce demand for fuels from aviation gas to diesel. This prompted the Organization of the Petroleum Exporting Countries (OPEC) and allied oil producers, together known as OPEC+, to sign a new deal to restrain production.

U.S. West Texas Intermediate crude oil is under pressure on Friday and in a position to close lower for a second consecutive week on growing demand worries and an unexpected rise in U.S. stockpiles that raised new concerns about oversupply.

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The uncertainty over how much supply OPEC+ is returning to the market adds another wrench in the recovery for oil prices still reeling from the pandemic-driven blow to consumption. Traders were looking for a 3.1 million barrel decline. Analysts estimate was for a draw of 1.3 million barrels.

Record supply cuts by the Organization of the Petroleum Exporting Countries and allies, known as Opec+, have helped support prices, but with grim economic figures being reported nearly daily, the outlook for demand for oil remains bleak.

"Today's crude data looked bearish. with about the only supportive element being the fact that the 2 (million-barrel) build was less than that indicated by the API", said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, noting prices could fall further unless Gulf of Mexico refiners fully restart soon after shutting for Hurricane Laura.

United States government inventory data is due on Thursday, delayed a day by Monday's Labor Day holiday.

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