Oil Price Fundamental Daily Forecast – Demand Woes Keeping Markets Capped

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are inching lower shortly after the regular session opening after giving back earlier gains. The lackluster trade during the pre-market suggests investors are waiting for the next catalyst to drive the price action in a major way. The current narrative driving the price action is nearly balanced with bullish traders focusing on supply issues and bearish traders reacting to demand concerns.

At 12:10 GMT, August WTI crude oil is trading $57.43, down $0.08 or -0.13%. This is down from $57.91. September Brent crude oil is at $64.20, down $0.03 or -0.05%. The high of the session is $64.69.

Supporting the market at this time are simmering tensions between the United States and Iran. Last week’s decision between OPEC and its allies to extend the production cuts into March 2020, and the on-going sanctions against Iran and Venezuela are also underpinning prices. Friday’s better-than-expected U.S. Non-Farm Payrolls report did somewhat ease demand concerns, but that seems to have worn off after just one session.

Keeping a lid on prices are lingering concerns over global economic slowdown caused by the on-going U.S.-China trade dispute. This has traders worried about demand. Furthermore, traders are also worried about rising U.S. shale production and huge domestic stockpiles that are counteracting the effects of the OPEC-led cuts in output.

We could be looking at a rangebound trade today unless Iran stirs the pot, or there is news about U.S.-China negotiations. The market may not see any volatility until late Tuesday with the release of the latest American Petroleum Institute inventories report, or Wednesday with the release of the U.S. Energy Information Administration’s weekly data.