U.S. West Texas Intermediate and international-benchmark Brent crude oil futures prices were hit on all fronts this week with the markets in a position to finish the week sharply lower. Especially significant is the evaporation of the risk premium in crude oil prices placed by traders last week following the attacks on Saudi Arabian oil facilities.
A combination of bearish supply and demand news helped fill in the price gap left by the strong jump in prices last week, which indicates dampened concerns over an escalation of tensions in the Middle East and increased worries about demand. Essentially, the price action suggests traders are thinking, “If demand is weak, it doesn’t really matter if supply is reduced.”
A number of factors pressured prices throughout the week including U.S.-China trade relations, Saudi facility repairs, rising U.S. supply and U.S-Iran sanctions.
Traders Worried About Trade Deal
Early in the week, crude oil prices were supported by optimism over improving U.S.-China trade relations with both sides making gestures the past two weeks to ease tensions. Prices tumbled, however, after President Trump said he would not accept a “bad deal” with China. This raised concerns that the two sides were still far apart, reducing the chances of a trade deal at their October 10-11 high-level trade talks.
EIA Reports Large Inventories Build, Rising Production
Prices were further pressured on Wednesday…