Oil Prices Turn Negative as Supply Worries Overcome Initial US-Iran Tensions

Oil Price Chart Forecast Technical Analysis

The discount on Canadian heavy crude narrowed versus USA benchmark West Texas Intermediate (WTI) crude on Monday from a 13-month high reached last week, but remained elevated on tight takeaway capacity and bloated storage levels. WTI was also down 9 cents, or 0.2 per cent, at United States dollars 58.95 a barrel.

Crude oil futures slipped 0.75 percent to Rs 4,101 per barrel on January 14, as participants trimmed their positions ahead of the signing of the so-called Phase One of the US-China trade deal, which will be vital to gauging the direction of the market.

Although, details surrounding the deal are yet to be spelt out but however, business a.m. gathered that China has made a commitment to purchasing more than $50 billion worth of energy products that will be supplied by the U.S over the next two years.

The U.S. -Chinese trade war had a tangible impact on global oil demand growth past year, which reached 890,000 barrels per day compared with initial forecasts of 1.5 million bpd, Tamas Varga, an analyst at PVM brokerage said in a note.

We witnessed aggressive sell-side activity on the latest EIA release (+1.1 million vs. -3.5 million expected) to the 59.15s, into the Wednesday's NY close and its been downhill ever since to channel support and the 200-day moving average. "In case of a trade deal upward revisions can be anticipated", Varga said.

The performance of heating oil has been quite poor in this winter due to lackluster demand, according to Robert Yawger, director of energy futures at Mizuho Securities USA LLC and John Kilduff, partner at Again Capital LLC.

Oil prices rose slightly on Tuesday amid optimism about a U.S.

Oil prices surged to their highest in nearly four months after a US drone strike killed an Iranian commander and Iran retaliated with missiles launched against USA bases in Iraq.

"As geopolitical tensions take a back seat for now, we may see more of the same in the short term", Tchilinguirian said.

He also said it was too early to talk about whether the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, would continue with production curbs set to expire in March.

However, the bulls have managed to find some support from increasing expectations that the United States weekly crude oil inventories are likely to have dropped last week, according to the latest Reuters poll.



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