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Oil Price Fundamental Daily Forecast – Slowing Global Economy Raising Demand Concerns

By:
James Hyerczyk
Updated: Mar 8, 2019, 11:52 UTC

If the selling pressure continues today then April WTI crude oil futures will change its trend to down on a trade through $55.02. May Brent crude oil’s trend will change to down on a trade through $64.50.

Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading sharply lower on Friday, falling over 2 percent shortly before the regular session opening and the release of the U.S. Non-Farm Payrolls report. The catalysts behind the selling pressure are the worsening global economic outlook after the European Central Bank issued another warning about Euro Zone weakness and a new report from China showed imports and exports weakened last month.

At 11:16 GMT, April WTI crude oil is trading $55.74, down $0.92 or -1.62% and May Brent crude oil is at $65.07, down $1.23 or -1.86%.

In the Euro Zone on Thursday, European Central Bank President Mario Draghi said the European economy was in “a period of continued weakness and pervasive uncertainty”. Conditions in the Euro Zone were perceived as so bad that the ECB:  pushed back the timing of its first post-crisis interest rate hike to 2020, cut its economic forecasts and launched a new round of cheap bank loans.

In China on Friday, dollar-denominated February exports fell 21 percent from a year earlier. This was the biggest drop in three years and far worse than analysts had expected. Imports also dropped 5.2 percent. So far, oil demand has remained steady, where imports of crude oil remained above 10 million barrels per day (bpd). However, an economic slowdown is likely to dent fuel demand and pressure prices at some point.

Keeping a lid on prices are concerns that rising U.S. crude oil production is likely to outweigh the OPEC-led supply cuts that have been underpinning the markets since the first of the year. OPEC and its allies have been cutting production by 1.2 million barrels per day since January 1, while soaring U.S. production is likely to continue to increase by more than 2 million bpd in 2019.

If the selling pressure continues today then April WTI crude oil futures will change its trend to down on a trade through $55.02. May Brent crude oil’s trend will change to down on a trade through $64.50.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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