Despite rebounding on Thursday and early Friday, October West Texas Intermediate crude oil futures are heading for a third consecutive weekly decline and its sixth weekly lower close out of seven amid increasing concerns about slowing global economic growth that could hit demand for petroleum products.
Additional bearish factors include data released earlier this week showing a large build in U.S. inventories. The crisis in Turkey also contributed to the weakness by driving up demand for the U.S. Dollar. This lead to a broad sell-off in dollar-denominated commodities including crude oil.
Traders are also concerned about the impact of the U.S. tariffs on China. Asian demand is showing signs of slowing down as trade disputes and a stronger dollar drag the economies of some of the world’s largest oil buyers.
The news that the U.S. and China will renew trade talks in late August may provide enough optimism to fuel a short-covering rally back into resistance, but without a permanent solution to the trade dispute, this rally is likely to be met with fresh selling pressure.
At this time, the fundamentals are bearish so it’s probably going to take a supply disruption to drive prices sharply higher.
U.S. Inventories Report
The bulk of the loss this week came on Wednesday after the release of a bearish government report. The U.S. Energy Information Administration said yesterday that crude oil inventory levels rose by 6.8 million barrels,…