Mubasher: Brent crude oil prices fell slightly earlier on Tuesday from 2019 highs due to the cautious tone about economic growth that may weigh on fuel demand this year, despite output cuts led the Organization of Petroleum Exporting Countries (OPEC).
Traders ascribed the slight downward correction to worries about the health of the global economy this year, Reuters reported.
The US-China trade dispute was hurting economic growth globally, Bank of America Merrill Lynch said in a note, adding, “addressing global trade tensions is key for improving the economic outlook.”
The world’s two largest economies are to resume trade talks this week in Washington that will greatly ease their bruising trade dispute.
On Friday, US President Donald Trump reiterated that he might extend a 1 March deadline for a deal and halt further tariffs on Chinese goods.
Bank of America Merrill Lynch said it forecasts Brent prices to range between $50 and $70 per barrel (pb), taking into consideration the economic outlook and supply-demand balances.
In spite of the cautious tone about trade, global oil markets remain relatively firm in view of supply cuts led by the oil-exporter bloc, along with Russia and its allies.
The Saudi-dominated oil cartel significantly reduced its oil production in January, making good on its agreement to trim output and drain a market glut.
OPEC crude output dropped by 797,000 bpd month-on-month to average 30.81 million in January, falling from 31.6 million bpd in December.
The largest cuts came from Saudi Arabia, OPEC’s de-facto leader, which pumped about 10.2 million bpd last January, down from 350,000 bpd from the previous month.
In the same vein, US sanctions against petroleum exporters Iran and Venezuela have lent support to oil prices.
By 7:34 am GMT, US Nymex crude futures went up 0.74% to $56 pb, while global benchmark Brent futures rose 0.02% to $66.51 pb.