Oil is down once again in today’s trading session as investors and the market alike remain divided on the future direction of the price with a lot hinging on the outcome of trade talks between the US and China.
Production cuts from OPEC have provided limited support but have failed to lead oil into any significant rally while the sanctions against Venezuela, which threatens to remove a large amount of oil from the market has also not turned in to some major boosting factor. The hesitation may lay in the fact that the US and China have not yet reached an agreement on a trade deal and with the March deadline approaching, the chances of a no deal situation are growing by the day.
If the 2 world super powers don’t settle their trade differences, the ramifications are expected to be wide reaching, with the global economy taking a massive hit which in turn would pressure the oil price a drop in demand would be inevitable.
Oil prices are still trying to figure out what lead to follow. On the one hand, there is the OPEC cut story, now coupled with increasing issues around Venezuelan supply", Vienna-based consultancy JBC Energy said.
"At the same time, it has to be argued that a lot of the economic data that has been released over the last few days has really not been too encouraging, and U.S.-Chinese trade talks are also seemingly not progressing very fast."