A recipe for New Year crude oil price weakness: Take 2 parts trade-war worries, 1 part each of quantitative tightening and fear of a slowdown in Chinese growth. Add a dollop of credit default concern and a generous pinch of European Union chaos, seasoned with a dash of Brexit uncertainty and Italian budgetary angst. Blend and allow to simmer gently for several months.
This stew of broader economic concerns has done more than oil market fundamentals to undermine crude prices since early October. Oil’s 9 per cent surge on Wednesday only brings it back to around the same price level it was at for the start of the week.
The supply-demand balance for oil does not appear to support the dramatic slump in prices since then, and there are plenty of reasons to expect crude supplies to fall in the coming weeks and months. Read More
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