Commodity Report: Crude Oil Price Forecast: 29 May 2019

Fredrick Soto
June 3, 2019

Pumpjacks are seen against the setting sun at the Daqing oil field in Heilongjiang province, China December 7, 2018.

Edward Moya, senior market analyst at futures brokerage OANDA in NY, said last month's crude oil price fall of more than 10% was "the worst May performance in seven years as the escalation of the global trade war saw the global growth outlook crumble".

U.S. Crude Oil WTI Futures were down 1.0% to $56.02 by 12:04 AM ET (04:04 GMT). WTI hit $53.41 a barrel, weakest since February 14.

Similarly, the global benchmark, Brent crude, could hit $70 per barrel.

In a tweet, Trump said that from 10 June a 5 percent tariff would be imposed and would slowly rise until the situation is resolved.

Iranian May crude exports dropped to less than half of April levels at around 400,000 barrels per day (bpd) after the United States tightened sanctions on Tehran's main source of income. "The 5% tariff adds an extra $2 million to the cost of their daily purchases".

Many analysts project that the Mexico trade dispute will trigger the ongoing trade war between the United States and China. So far Mexico has not said whether it would retaliate.

Specifically, U.S. crude stockpiles rose at the fastest pace seen since 2016. -China trade war increased the danger of a recession.

Additional levies by Beijing on the majority of US imports on a $60 billion target list are due to take effect on Saturday. This is helping limit demand from these countries, putting pressure on crude oil prices. "This comes as OPEC appears to be heading towards extending the current production cut agreement".

Iranian May crude exports dropped to less than half of April levels, at roughly 400,000 barrels per day (Bpd) after the US tightened sanctions on Tehran's main source of income.

Oil prices dropped 1.5% percent on Friday to their lowest in almost three months after U.S. President Donald Trump said he would impose tariffs on imports from Mexico, stoking fears about global economic growth.

Because of weakening demand, Bernstein said "any upside is capped" in oil markets despite relatively tight supply. But in May the rig count was reduced for the sixth straight month.

US investment bank Jefferies said on Friday that Brent had been falling "on the U.S".

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