Crude oil prices were set for a weekly gain earlier today, following the news that the U.S. federal government has slapped new sanctions on Chinese companies involved in oil trading with Iran.
This week ends a day earlier for commodity traders, ahead of Good Friday and the Easter Holidays.
At the time of writing, Brent crude was changing hands for $66.41 per barrel and West Texas Intermediate was trading at $63.19 per barrel, both up from opening.
Oil news this week has been a mixed bag, but it seems bullish developments have prevailed. Sanctions on Iran are one of the leading reasons for the recovery in oil prices. Another is a forecast from the International Energy Agency that expects oil supply growth this year to be weaker than previously predicted.
The IEA said in its latest monthly oil report that global oil supply was set to rise by 1.2 million barrels per day this year, 260,000 bpd lower than the growth expected last month. As a basis for this update, the IEA cited lower oil production in the United States and Venezuela.
“I think the rally has a couple of factors behind it – shorts covering, the weaker USD, which makes crude oil cheaper to buy, and the U.S. pressure on Iran,” IG analyst Tony Sycamore told Reuters. On the bearish side, however, “If we assume that U.S. growth is going to be flat at best for the next two quarters and Chinese GDP is set to slow to somewhere between the 3%-4% band, it’s not good for crude oil,” the analyst added.
ING commodity analysts, meanwhile, noted the impact of tariffs on the outlook for oil, saying in a note from earlier today that “It’s unclear where this escalation [between the U.S. and China] is going. The uncertainty is generating significant headwinds for global growth and, as a result, oil demand.”
Source: By Irina Slav from Oilprice.com