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The rise in international oil prices is unlikely to continue

Views: 0     Author: Site Editor     Publish Time: 2019-02-10      Origin: Site

Source: China National Chemical News January 31, 2019

In the week ending Jan. 11, international oil prices rose sharply due to factors such as investor confidence picking up. As of the close of the week, the two major oil index contracts rose significantly, with Brent crude oil up about 6% and US crude oil up about 7.6%. However, market participants remain cautious because a series of recent economic data has triggered investors' concerns about the global economic slowdown.

Kristalina Georgieva, Acting President of the World Bank, said that the global economy had a strong momentum in early 2018, but it gradually stalled in the middle of the year. This year's development path may be more bumpy.

The US Energy Information Administration's data for the week showed that US commercial crude oil inventories fell 1.7 million barrels last week, which was lower than the 2.8 million barrels drop predicted by analysts. During the same period, U.S. auto gasoline inventories increased by 8.1 million barrels qoq, higher than analysts’ forecast of 3.4 million barrels; distillate stocks surged 10.6 million barrels, more than five times the market’s forecast of an increase of 1.9 million barrels.

Morgan Stanley lowered its 2019 oil price forecast by more than 10% this week, arguing that weakening economic growth expectations and increased oil supplies from the United States will put oil prices under pressure. The increase in US oil production will offset the effects of OPEC-led production cuts.

Morgan Stanley also predicts that the average price of Brent crude oil this year will be US$61/barrel, lower than the previous forecast of US$69/barrel; the average price of New York light crude oil will be US$54/barrel, lower than the previous US$60/barrel barrel.

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