Crude oil prices fell slightly today in Asia as traders continued with caution amid persistent worries about global economic growth and the chances of the United States and China agreeing on a trade deal.
At the time of writing, Brent crude was trading at US$62.01 a barrel, up by 0.62 percent, with West Texas Intermediate up 0.08 percent to US$52.68 per barrel.
Bad news about the state of the global economy, this morning, is coming from Europe and China. In Europe, analysts are warning of stock market weakness and growing recession fears as the European Commission cut its economic outlook for the eurozone citing Brexit chaos fears and a slowdown in China.
This expected economic slowdown in China is adding its own weight to crude oil prices given that the Asian economy is the second-largest oil consumer in the world. The trade dispute with Washington is certainly not helping reverse the bearish mood, deepened by President Trump's recent announcement that he would not have any meeting with his Chinese counterpart Xi Jinping until the beginning of March. March 1 is the deadline Washington and Beijing set for themselves for reaching a trade agreement.
If no agreement is reached, president Trump will further increase tariffs on Chinese goods, which will lead to retaliation from Beijing and the exchange will as usual hurt oil flows: let's recall that Chinese refiners stopped importing U.S. crude last year when the tension between Washington and Beijing heightened in late summer.
There are, however, tailwinds as well, or rather one major tailwind, which is OPEC's production cuts. The latest production data for Saudi Arabia, from a survey by S&P Global Platts, shows that the Kingdom cut more than it had agreed to, at 10.21 million bpd, down 400,000 bpd from December. What the OPEC cuts are doing, however, is putting a floor under oil benchmarks, rather than achieving their goal of pushing prices higher.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More