Oil Price Fundamental Daily Forecast – Focus Shifts Back to Demand Concerns

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading mixed on Friday after failing to follow-through to the upside following yesterday’s strong performance. Thursday’s rally was fueled by tanker attacks near Iran, but since there has been no major supply disruption or an escalation of military activity in the region, speculators lightened up on the upside.

At 12:24 GMT, August WTI crude oil futures are trading $52.44, down $0.09 or -0.28%. August Brent crude oil is at $61.41, up $0.10 or +0.16%.

Prices are also trading lower in response to weaker than expected economic data from China, which raised concerns over a slowing global economy and lower future demand.

Today’s price action essentially indicates that lower demand is actually a bigger concern for traders than Middle East geopolitics.

Sellers are also responding to another report from experts, calling for lower future demand. The International Energy Agency (IEA) cut it demand growth forecast for 2019 by 100,000 barrels per day (bpd) to 1.2 million bpd, due to worsening prospects for world trade. However, this news was somewhat softened after the IEA said demand growth would climb to 1.4 million bpd for 2020.

On Thursday, OPEC cut its 2019 forecast for growth in global oil demand even lower than the IEA, to 1.14 million bpd.

In other news, China’s industrial output growth slowed to a more than 17-year low of 5% in May, well below expectations, in the latest sign of weakening demand in the world’s second-largest economy as the United States ramps up trade pressure.

Fixed-asset investment also grew less than expected, official data showed on Friday, reinforcing expectations that Beijing will need to roll out more growth-boosting measures soon.

Daily Forecast

The inside current trading ranges indicate investor indecision and impending volatility. However, the news is overwhelmingly bearish due to the demand concerns. Traders are watching for new developments in the Middle East, but unless there is a military response from the United States, or another attack, gains are likely to continue to be limited.