Crude oil futures turned sharply higher heading into Thursday’s settlement, tracking a rally in equities on a report the Trump administration may delay Mexican import tariffs, Kallanish Energy reports.
Crude futures traded mostly flat throughout Thursday’s session as sentiment remained weak amid new signs of a weakening global economy and ongoing concerns about growth in supply.
U.S. West Texas Intermediate crude futures settled 91 cents higher, at $52.51 per barrel, posting a 1.8% gain on the day. WTI was last trading up $1.50, or 2.9%, at $53.18/Bbl after the settlement.
Brent crude futures rose $1.04, or 1.7%, to $61.67/Bbl Thursday. Brent also extended gains after its settlement and was last up $1.67, or 2.8%, at $62.30/Bbl.
Lowest levels since mid-January
On Wednesday, WTI and Brent hit their lowest levels since mid-January at $50.60 and $59.45, respectively, after U.S. crude production hit a new record high and stockpiles hit their highest in nearly two years.
Signs of slowing global economic activity have increased in recent months, fueled by trade tensions between the U.S. and China, the world’s two largest energy consumers.
President Trump added to the market’s worries after threatening last week to place tariffs on Mexican goods unless the nation clamps down on illegal border crossings into the U.S.
Decision after G20 summit
Mexico is a major source of crude oil to U.S. refineries and the biggest purchaser of American gasoline exports.
Trump, in his latest public comments about the trade war, said he would decide on more China tariffs “probably right after the G20” meeting at the end of June, which followed his overnight threat to put tariffs on “at least” another $300 billion worth of Chinese goods.
Morgan Stanley lowered its forecast for growth in oil demand for 2019 from 1.2 million barrels per day (Mmbpd), to 1.0 Mmbpd, and cut its Brent price forecast for the second half of 2019 to $65-$70/Bbl, from $75-$80/Bbl.
Oil prices rally during 1st 5 months of 2019
Oil prices rallied during the first five months of 2019, to a high of roughly $75/Bbl, supported by supply curbs by Opec+ members. U.S. sanctions limiting oil exports from Iran and Venezuela also supported prices.
Members of Opec+, which includes most Opec members, along with a number of non-Opec producers led by Russia, are preparing to discuss whether to extend their supply curbs totaling 1.2 Mmbpd past June 30, later this month.
This post appeared first on Kallanish Energy News.