Oil Price Fundamental Daily Forecast – Bullish as Middle East Tanker Attacks Offset Concerns Over Trade Deal

After several days of consolidation, U.S. West Texas Intermediate and international-benchmark crude oil futures are trading higher on Monday shortly before the regular session opening. Buyers are reversing early session weakness that was fueled by worries over global economic growth amid the escalation in the U.S.-China trade dispute. The catalyst behind today’s friendly price action is concerns about supply disruptions in the Middle East.

At 11:11 GMT, July WTI crude oil futures are trading $62.60, up $0.80 or +1.29% and July Brent crude oil futures are at $71.67, up $1.07 or +1.52%.

U.S.-China Trade Dispute

Pressure from an escalation of the trade dispute between the U.S. and China kept a lid a prices last week and the event carried over to Monday’s opening. The U.S. also raised tariffs against China after last week’s trade negotiations failed to yield any fruit. Traders are now awaiting retaliation from China, which is likely to include fresh tariffs on U.S. imports.

The biggest concern for oil traders is that a prolonged trade dispute leads to a slowdown in the global economy. This could lead to lower demand for crude oil and oil related products. According to the latest data from the International Energy Agency, the United States and China together accounted for 34% of global oil consumption in the first quarter of 2019.

Middle-Eastern Turmoil

Crude oil prices firmed following a flat-to-lower opening after Saudi Arabia reported that two Saudi oil tankers were among vessels targeted by a “sabotage attack” off the coast of the United Arab Emirates, condemning it as an attempt to undermine the security of global crude supplies.

CNBC also reported that the UAE said on Sunday that four commercial vessels were attacked near Fujairah, as one of the world’s largest bunkering hubs. The port lies near the Strait of Hormuz, one of the world’s most important oil export waterways.

It’s also been reported that the government of Fujairah, one of the seven emirates that make up the UAE, in a tweet denied media reports about blasts inside Fujairah port and said the facility was operating normally.

Underpinning the Markets

The OPEC-led supply cuts and U.S. sanctions against Venezuela and Iran continue to provide the most support from crude oil prices.

Other News

Hedge funds cut their bullish wagers on U.S. crude oil to the lowest level in a month and raised their bets on Brent crude to the highest in nearly seven months, U.S. government data showed on Friday. This looks like the professionals believe rising U.S. production will keep a lid on WTI prices, while the shortfall from the expanded sanctions against Iran are not likely to be completely covered by OPEC and its allies.

Additionally, according to Baker Hughes, U.S. energy companies last week reduced the number of oil rigs operating for the third time in four weeks, cutting them by two and bringing the count down to 805 rigs.

Daily Forecast

WTI and Brent crude oil are likely to remain firm on Monday unless the U.S.-China trade dispute situation escalates. Speculators are holding new longs in reaction to the attack near Fujairah. They are likely to maintain their positions in anticipation of additional attacks, or until they find out how much oil has been lost, and how much damage the facility sustained.

Renewed turmoil over the U.S.-China trade situation or an extremely weak stock market could limit gains or even drive prices lower.