- Easing concerns over a military conflict in Middle East weigh on oil prices.
- API last week reported a decline of 1.4 million barrels in crude oil stocks.
- Goldman Sachs lowers oil demand forecast for 2019.
Although escalating geopolitical tensions in the Middle East following Iran’s capture of a British-flagged oil tanker last Friday provided a boost to crude oil prices by reviving concerns over possible supply disruptions, the rally lost its momentum on Tuesday, causing the barrel of West Texas Intermediate to fluctuate in a tight range above the $56 handle. As of writing, the WTI was virtually unchanged on the day at $56.20.
Supply-demand dynamics drive oil prices
In response to the developments in the Middle East, the International Energy Agency on Monday said that it had large enough emergency oil stocks to supply the market if needed to ease worries. Additionally, the IEA explained that the global supply was still exceeding the demand amid heightened production in the U.S. despite OPEC’s output cuts and lower Iranian oil exports.
Later in the session, markets will be paying close attention to the American Petroleum Institute’s (API) weekly crude oil stock report.
In the meantime, in a report published on Sunday, Goldman Sachs announced that it cut its forecast for 2019 global oil demand to 1.275 million barrels per day from 1.45 million barrels per day, reminding investors of the potential negative impact of the dismal global economic outlook and further weighed on crude oil prices at the start of the week.
Technical levels to watch for