Crude has been caught up in wider financial market weakness as the U.S. government shutdown, higher U.S. interest rates and the U.S.-China trade dispute unnerved investors and exacerbated worries over global growth.
The continuing collapse in oil prices signals that investors are worried about a 2019 recession, according to Helima Croft, global head of commodity strategy at RBC Capital Markets.
“I think what we’re seeing in oil is a big, big concern for 2019 about a recession. I think that is really weighing heavily on this market,” Croft told CNBC’s “Closing Bell” on Friday.
Croft’s commentary reflects a view on Wall Street of a slowing economic growth and weaker-than-anticipated demand are pushing the oil market deeper into bear market territory.
The rout has continued despite a pledge earlier this month by OPEC, Russia and several other oil producers to remove 1.2 million barrels per day from the market beginning in January.
China has begun imposing new tariffs to crude oil from the U.S
China has begun imposing new tariffs to crude oil from the U.S. In the continued escalation to Trump’s trade war, China also filed a complaint against the United States at the World Trade Organization (WTO).
West Texas Intermediate crude for the October delivery CLV19, -3.43% was down $1, or 1.8%, to reach $54.10 a barrel on the New York Mercantile Exchange. In August, front-month prices for the U.S. benchmark suffered a 5.9% monthly decline, according to Dow Jones Market Data.
Last week Trump demanded U.S manufacturing Companies move out of China.
A Failure Of OPEC+ Could Turn The U.S. Oil Boom Into Another Bust?
The prevailing conventional “wisdom” appears to be that they will take their medicine one more time, and agree to at least extend their agreement through the end of 2019, and possibly make further cuts to their export levels. One thing is certain: The U.S. industry, which has benefited greatly from the OPEC+ agreement, is holding its collective breath hoping that does happen. Because if it doesn’t, this great oil boom of the past few years could turn into another bust almost overnight. @ forbes.com
Just in case you aren’t thinking about it yet.