Oil Price Fundamental Daily Forecast – Resumption of US-China Trade Talks Underpinning Prices

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower on Friday as the euphoria from this week’s bigger than expected American Petroleum Institute (API) and Energy Information Administration (EIA) weekly inventory drawdowns appear to be wearing off.

The news may be enough to prop up prices along with a slight easing of tensions between the United States and China, however, it’s not likely strong enough to offset worries over slower demand growth due to a weakening global economy and a possible U.S. recession.

At 10:29 GMT, October WTI crude oil is trading $56.18, down $0.53 or -0.93% and December Brent crude oil is at $59.59, down $0.19 or -0.32%.

WTI and Brent crude oil are in a position to finish the week higher, but the upside momentum appears to be fading at the end of the week. The events this week only prove what’s important to buyers at this time:  the OPEC-led supply cuts are working to reduce U.S. supply despite record production, and that there will be further gains down the road if the planned trade talks between the United States and China progress.

Trade Talks Resume

The United States and China verified yesterday that they will resume trade talks next Thursday. President Trump said the U.S. and China are set to have trade talks “at a different level.” Earlier in the day, China softened its stance saying it’s willing to resolve the trade war with a “calm attitude” and indicating it won’t retaliate against Trump’s new tariff threat immediately. China also said the Chinese and U.S. trade delegations have maintained “effective” communication.

Hurricane Dorian

Some people are talking about Hurricane Dorian’s impact on oil prices as it races toward the Atlantic Coast of Florida. At this time, it’s a non-event because there are no oil platforms on the East Coast of Florida.

Oil companies will begin to take the appropriate steps to secure their oil platforms and to protect workers if the hurricane crosses over Florida and enters the Eastern Gulf of Mexico next week.

Daily Forecast

Monday is a U.S. bank holiday so barring any surprise moves from the United States or China, prices could remain rangebound throughout the session. Furthermore, the path of the Hurricane hasn’t been determined yet so that is another variable that should be watched.