Oil market analysts have identified the combination of geopolitical risk, global growth, China’s economy and the Dollar’s trajectory as the main influencers of current rise in crude oil price. This is even as they forecasted that, for oil price to fully recover, the global landscape needs to improve trade tensions as well as reduce shale oil production.
Meanwhile, Brent and West Texas Intermediate crude oil futures dip, after hitting their highest level since December 7. A market report obtained by our correspondent showed that, Brent was down by $1.95 to $60.48, while WTI, also declined by $1.90 to $51.59 a barrel. Already, the Organisation of Petroleum Exporting Countries [OPEC] and Russia have agreed to cut production by 1.2 million barrels a day, thus causing demand to be higher than supply.
An Energy analyst at Forex Times, Lukman Otunga, in a chat with Vanguard, said: “Oversupply concerns will complicate any efforts for the commodity to rebound higher. The OPEC production cut deal is seen facing headwinds if demand for crude ends up weakening on slowing global growth. “With OPEC and non-OPEC members potentially pumping production on signs of repeated weakness in oil markets, the outlook for oil remains tilted to the downside.
It has been a positive trading week for oil prices thanks to Dollar weakness and improving market mood. Oil price hits $58, highest in 2019, as Saudi Arabia cuts output by 500,000 bpd “While the commodity has the potential to venture higher in the short term, gains are likely to be capped by supply and demand dynamics. Concerns over excessive supply in the markets coupled with fears over falling demand are likely to create obstacles for oil bulls in the medium to longer term.
“The combination of geopolitical risk, global growth fears, China’s economy and the dollar’s trajectory remain themes seen influencing oil prices. “Although a weaker dollar has the potential to offer oil prices some support, robust production from US Shale and further signs of China experiencing a slowdown will translate to downside losses for oil.
“Focusing on the technical picture, WTI Crude has scope to venture towards $54 in the near term.” Also, Balint Balazs, global commodity analyst at Schneider Electric said: “A major bull-run is still far from formulating in the oil market, and prices are still close to 30 percent lower than the recent highs in October, to put the current levels in perspective. “For the near-term, however, the OPEC+ cuts, the continuous drop in Iranian exports, and a weaker Dollar could help support crude prices.”