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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Oil Rises As Market Awaits Saudi Move Counter Glut

Despite another gloomy demand forecast out today, oil prices rose on Friday morning, following reports that OPEC’s kingpin Saudi Arabia is talking to other producers to devise a new strategy to stop the oil price slump.

As of 08:50 a.m. EDT on Friday, WTI Crude was up 1.16 percent at $53.15, and Brent Crude was trading up 1.2 percent at $58.07, after prices had dropped on Wednesday to their lowest levels since January this year. Oil prices have now fallen by more than 20 percent since a recent peak in April, entering a bear market.  

In the past week, the U.S.-China trade war and a looming currency war have rattled oil markets, and a surprise crude build in U.S. inventories also dragged the price of oil down on Wednesday.

On Thursday, reports emerged that Saudi Arabia had approached other members of OPEC to discuss possible steps they can take to arrest a slide in oil prices that have brought them to the lowest in seven months.

The Saudis were also quick to assure the market on Thursday that despite healthy demand in all regions, the world’s top crude oil exporter continues to keep its exports below the 7-million-bpd mark and will do so at least through September. Saudi Arabia will continue to pump below 10 million bpd and export below 7 million bpd of Saudi oil this month and next, a Saudi official told Reuters.

While the market speculates what, if any, could be OPEC’s next moves, outlooks for global oil demand growth are getting gloomier.

The International Energy Agency (IEA) said on Friday that oil demand growth in the first half increased by just 600,000 bpd, with China the sole source of significant growth at 500,000 bpd. This was the lowest global oil demand growth in more than a decade, since the financial crisis in 2008, according to Reuters.

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on August 09 2019 said:
    Oil prices are currently under pressure because of a glut in the global oil market. While the OPEC+ production cut agreement in force since January this year was successful in putting a floor under oil prices, it didn’t manage to arrest the rise in the glut in the morning.

    The reason is very plain and simple: the trade war between the US and China. This has been causing uncertainty in the global economy, depressing global oil demand and prices and as a result augmenting an already existing glut.

    Therefore, there is nothing that Saudi Arabia, OPEC+ and Russia can do to arrest the slide in oil prices as long as the trade war continues to rage.

    Only an end to the trade war could invigorate the global economy, stimulate the global demand for oil, absorb the glut in the market and push oil prices upwards.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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