U.S. West Texas Intermediate and International-benchmark Brent crude oil futures are trading lower on Friday as investors continue to express concerns over demand growth after weak Asian economic data fuelled uncertainty about the region’s economic outlook. Furthermore, traders continued to grow impatient with OPEC+’s inability to make a decision about additional production cuts.
Despite yesterday’s friendly U.S. Energy Information Administration (EIA) Weekly Inventories report, prices turned lower on rising market uncertainty, suggesting that traders feel there is just too much risk in the market at this time to hold profitable long positions over the weekend.
Global Officials to Discuss Economic Impact of Coronavirus
Finance leaders from the Group of 20 major economies are set to discuss risks to the world economy in Saudi Arabia over the weekend. On Thursday, the International Monetary Fund said it was too early to tell what impact the virus would have on global growth.
As G20 finance ministers prepared to meet, IMF Managing Director Kristalina Georgieva said she hoped the economic impact of the virus would be “a V-shaped curve” with a sharp decline in China and sharp rebound after containment of the virus. “But we are not excluding that it might turn to be different scenario,” she said.
U.S. Energy Information Administration Weekly Inventories Report
The EIA revealed on Thursday that U.S. crude supplies edged up by 400,000 barrels for the week-ended February 14. Analysts were looking for a rise of 3.3 million barrels.
The EIA data also showed a supply decline of 2 million barrels for gasoline, while distillate stocks fell by 600,000 barrels. Analysts were expecting a 300,000 barrel increase in gasoline supplies, but distillates were forecast to fall by 1.6 million barrels.
Today’s early weakness suggests traders aren’t going to wait for the IMF to get the data it needs to say the global economy will weaken from the impact of the coronavirus. Furthermore, just last week, OPEC and the International Energy Agency predicted lower demand.
Traders are likely to keep pressure on crude oil because of an expected supply surplus in the first quarter and the need for OPEC+ to take further action at their meeting in early March. Furthermore, the rapidly rising U.S. Dollar is likely to lead to a drop in demand for dollar-denominated crude oil.
Last week, oil traders thought additional production cuts from OPEC+ were imminent, but Russian Energy Minister Alexander Novak dampened those thoughts on Thursday when he said that global oil producers understood it would no longer make sense for OPEC and its allies to meet before their gathering.
This article was originally posted on FX Empire
More From FXEMPIRE:
- USD/JPY Weekly Price Forecast – US Dollar Breaks Out For The Week
- USD/JPY Forex Technical Analysis – Needs to Hold Above 111.580 to Sustain Upside Momentum
- NZD/USD Forex Technical Analysis – Close Over .6332 Forms Closing Price Reversal Bottom
- Crude Oil Price Forecast – Crude Oil Markets Continue to Fight
- USD/JPY Price Forecast – US Dollar Pulls Back to End Week Against Japanese Yen
- GBP/JPY Price Forecast – British Pound Recovers After Initially Falling