WTI rose 0.42 percent while Brent is flat after yesterday’s surprise drawdown in US weekly crude inventories and the Chinese factory activity dropped to a 3-year low. Oil stocks fell 8.65 million barrels when the market was expecting a rise of 2.8 million. West Texas Intermediate is still down 0.16 percent on a weekly basis with crude lower with a 1.18 percent loss.
US President Trump’s tweet warning OPEC to relax caused a massive drop in both benchmark, but as economic data in the US has remained strong with baked in demand for energy forecasted higher the American benchmark is closer to rebounding.
Saudi Arabia responded to Trump and no immediate change is expected as OPEC+ will continue to limit production seeking to stabilize prices.
The producers that are part of the agreement have given no signs that they are ready to reassume normal production, but there are concerns on how long they can keep limiting their revenue.
Despite positive trade news as the US and China appear near an agreement to end their tariff feud, there are still lots of unknowns on what the deal will look like. Global growth estimates have been slashed as the two largest economies engaged in a trade war.
Supply disruptions will continue to boost prices, but once those are priced in there is little to suggest global energy demand is on the mend, putting more pressure on crude going forward.
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