Demand Worries Outweighing Iran Concerns

Daniel Fowler
July 9, 2019

"Concerns on the outlook for the global economy seem to be outweighing big events like the Middle East tensions at the moment", said Sungchil Will Yun, a commodities analyst at HI Investment & Futures Corp, in a Bloomberg report.

International Brent Oil Futures were down 0.3% to $63.92.

"Oil prices are to hold up reasonably well during coming months or at least they are not to fall out of bed".

Meanwhile, West Texas Intermediate was down 0.36 per cent to United States dollars 57.45, while global benchmark Brent was down 0.23 per cent to USD 63.96 a barrel. They rose 15 cents in the previous session.

Oil prices firmed on Monday on tensions over Iran's nuclear program but gains were capped by concerns about global economic growth and consequently oil demand.

But the US-China trade war has dampened prospects of global economic growth and oil demand.

He further mentioned some of US actions in the oil market saying that the U.S.is the world's largest producer of crude oil which had added roughly 3.6 million barrels per day (bpd) to its output over the past two years.

Japanese government figures on Tuesday also showed that real wages in the country fell for a fifth straight month.

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Oil held gains as rising tension in the Middle East kept investors wary of potential disruptions, while expectations the US and China can make a breakthrough following the resumption of trade talks are low.

"A very cautious open this morning supported by a better than expected (non-farm payrolls)", said Stephen Innes, managing partner at Vanguard Markets in Bangkok.

OPEC and its allies last week agreed to extend their supply-cutting deal until March 2020.

Iran on July 8 threatened to restart deactivated centrifuges and step up its enrichment of uranium to 20% in a move that further threatens the 2015 nuclear agreement that Washington abandoned a year ago.

The confrontation has introduced america and Iran near battle.

President Donald Trump, who pulled the United States out of the deal past year, warned Iran to be careful.

In the meantime, Goldman Sachs mentioned development in USA shale manufacturing was prone to outpace that of world demand no less than via 2020, limiting beneficial properties in oil costs regardless of output curbs led by OPEC.

The affected countries would remain exempted from the implementation of the oil supply adjustment of 1.2 million barrels a day owing to their situation, Mohammad Barkindo, the secretary general of OPEC told reporters in Vienna, according to a Nigerian daily, This Day.

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