Oil inched up on Wednesday, supported by hopes that OPEC and allies may deepen their production cuts in December, while weakening global economic and oil demand outlook continues to weigh on prices.
Prices steadied early today, after two consecutive days of losses earlier this week, when the ongoing U.S.-China trade dispute and another gloomy economic forecast depressed the price of oil.
On Tuesday, the International Monetary Fund (IMF) slashed, again, its forecast for global economic growth, expecting growth to slow down to its weakest pace since the 2008-2009 financial crisis.
“Growth continues to be weakened by rising trade barriers and increasing geopolitical tensions,” the IMF said, noting that “the global economy is in a synchronized slowdown.”
This disheartening outlook on global growth weighed on the oil market as participants expect that oil demand growth in the world will further slow down amid weakening economies. Related: What’s Behind The Bearish Bias In Oil Markets?
Those demand concerns continue to weigh on the oil prices this week, although some hints from OPEC’s chief suggested that the OPEC+ coalition is open to discussing and possibly doing ‘whatever it takes’ to rebalance the market. All options are on the table, including a deeper cut from OPEC and its allies in December, OPEC Secretary General Mohammad Barkindo said last week.
Later on Wednesday, oil prices will receive another driver for a direction up or down, as the API is reporting its weekly inventory data. Market expectations are that U.S. crude oil inventories rose by 3 million barrels over the last week, according to ING. If this expectation is confirmed, “this would likely put some immediate pressure on the market, in an environment where demand concerns continue to linger,” Warren Patterson, ING’s Head of Commodities Strategy and Senior Commodities Strategist Wenyu Yao, said on Wednesday.
By Tsvetana Paraskova for Oilprice.com
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