Crude rallies, but checked by economic worries - 20 Mar 2019
- Our latest Bulls & Bears report notes that tightening crude supply has gradually elbowed out broader bearish financial market concerns that were dominating oil market sentiment since the fourth quarter of 2018, and has prompted a 25% rally in Brent since the start of this year.
- OPEC production cuts are off to a strong start and reached full compliance in February, while fresh threats hang over Venezuelan and Iranian supply, both thanks to US sanctions.
- However, global economic headwinds are still blowing, keeping crude’s rally in check. The positive impact of an expected US-China trade agreement has been largely priced into crude over recent weeks. Finally, OPEC and its de facto leader Saudi Arabia are prone to come under pressure from Trump’s Twitter admonitions if crude extends its rally much beyond current levels.
- Over the medium term, we see Brent in the $60-70/bbl range.
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