Oil volatility eases, but roller-coaster could resume after U.S. retail sales release
In European trade on Friday, West Texas Intermediate oil for October delivery is trading at $54.70, down $0.37. Crude has displayed plenty of volatility this week. The week with strong gains, as crude climbed as high as $58.77, its highest level since July 15th. However, the pair retraced and continued its sharp descent, falling to a low of $54.01 on Thursday. Crude then pulled back and closed on Thursday at $55.07.
OPEC has lowered its forecast for global oil demand for the rest of 2019. The September report estimated worldwide consumption at 1.02 million barrels per day, compared to 1.82 million in the August report. This was a result of weak global growth in the first half and the expectation that economic conditions would remain weak for the remainder of 2019. This has provided downward pressure on oil prices.
Trump May Meet With Iranian President
The markets are abuzz as there is growing speculation that President Trump is looking to engage Iran and may meet Iranian president Rouhani at the U.N later this month. Trump has imposed punishing sanctions against Iran, which has greatly reduced Iran’s oil exports. If a meeting materializes and the U.S. eases sanctions, this would result in a boost in Iranian oil shipments. This would likely put downward pressure on oil prices.
With the U.S. releasing key consumer spending data later on Friday, crude’s roller-coaster ride could well continue in the North American session. The markets are braced for soft numbers for retail sales reports. The headline release is expected to drop to 0.2%, down from 0.7% a month earlier. The core release is forecast to slow to 0.1%, after an impressive gain of 1.0% in July. If retail sales slip, this would indicate weakness in the U.S. economy and oil prices could resume its downward movement.
Kenny is an experienced market analyst, with a focus on fundamental analysis. Kenny has over 15 years of experience across a broad range of markets and assets –forex, indices and commodities.
