The oil price is caught in a tug of war between the bulls and the bears

Catogory : Market Report

Oil is caught in a tug of war between the bulls and the bears due to lack of a strong direction and market developments that offset each other.. A few days before the development in Libya, however, crude oil rose on news that a production terminal in Nigeria had shut down following an explosion. There are more factors in the oil markets that reflect these two examples. US Shale production keeps rising, sometimes offsetting OPEC’s supply cuts and keeping prices range bound. In other drivers, US-China trade deal optimism is countering negative sentiment about China’s slowdown. This pattern could be interpreted as positive news for the oil markets. After a sharp slump followed by a steep recovery, it could mean prices are more likely to stabilize now, possibly meaning a base-case scenario of $60 to $70 in the initial part of the second quarter. A trade deal between the US and China is a key factor for the bulls. At the time of writing, optimism is riding high that the countries’ leaders President Donald Trump and President Xi Jinping can reach an agreement later in March. Signals from both sides appear to be positive after negotiations made significant progress towards a deal. On the other side of the coin, there are more indications that China’s leadership is concerned over gross domestic product growth following the government’s revised expectations for full-year results to range between 6 and 6.5 per cent. This could potentially indicate a reduced level of demand for crude oil, and keeps the bears satisfied about the potential downside for the oil price.