Crude Continues Crisis of Confidence
by Andreas Exarheas
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas
Crude continues to have a crisis of confidence.
That’s what Rebecca Babin, a senior equity trader for CIBC Private Wealth in New York, told Rigzone, adding that investors have limited appetite to buy a dip in crude as data from China continues to be soft and FED policy in the U.S. remains uncertain.
“Without an incremental catalyst to shift sentiment, crude remains for sale from the systematic community,” Babin told Rigzone.
“The commodity looks over sold in the short term, but short covering rallies are likely to be met with supply until the market gains confidence that demand in China is improving,” Babin added.
In a market analysis sent to Rigzone earlier today, George Pavel, General Manager at Capex.com Middle East, warned that “crude oil futures could return to their decline as concerns about slowing global demand, especially from China, continue to weigh on expectations”.
“China’s weaker demand could continue due to a softer economic performance and a shift towards electric vehicles (EVs) and LNG-fueled trucks, reducing diesel demand. Concerns about the direction of the U.S. economy could also create risks for oil markets,” he added.
“In this regard, traders could monitor economic data release and could react accordingly. This week is busy with data publications, with market participants looking forward to inflation data and crude inventory figures,” he continued.
In the analysis, Pavel noted that U.S. crude oil inventories have declined for the past three weeks, “with a significant drop of 6.9 million barrels in the last week of August, exceeding market expectations of a 1.1-million-barrel draw”.
“The market could react strongly to another surprise drawdown while the global mood remains pessimistic,” he highlighted.
“On the economic front, U.S. core Inflation is expected to remain steady at 3.2 percent year on year in August, while the overall inflation rate is projected to ease to 2.6 percent from 2.9 percent,” Pavel said in the analysis.
“Lower inflation could boost interest rate cuts expectations and the potential for a stronger economy and higher U.S. oil demand,” he added.
by Andreas Exarheas
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas