Global Energy Advisory
As the trade war between China and the US sparks even lower oil demand growth forecasts from analysts far and wide, not even OPEC’s July oil production – which hit an eight year low - was able to keep prices from their worst week in nearly seven months.
Market Panic Bandaged by OPEC Psychological Intervention
Saudi Arabia “leaked” on Thursday that it was talking with OPEC members behind the scenes to see what could be done to lift oil prices.
This, combined with its official announcement that it would keep oil exports below 7 million bpd through at least September, had an almost immediate and profound effect on the price of oil.
After the trade war between the US and China escalated earlier in the week, fears of a currency war took hold, tanking oil prices. Prices were pressured further as analysts misjudged the inventory movements reported by the EIA on Wednesday, with analysts predicting a draw rather than the build that was reported.
Saudi Arabia, which is still looking to get a $2 trillion valuation out of Aramco, needed to react swiftly. OPEC options are somewhat limited, however, as they are already producing below their agreed upon quota.
As China and OPEC jockey for position in setting oil prices, a further price slide may be on the horizon should China increase its purchases of Iranian crude oil in defiance of US sanctions.
While Saudi Arabia has halted the crash, bearish…