Brent oil price slides on demand concerns despite OPEC+ extending cuts
Despite the Organisation of the Petroleum Exporting countries and its allies agreeing to extend supply cuts on Tuesday it was unable to offset investors’ concerns about global demand for crude.
Oil prices fell on Tuesday as investors concerns over global demand for the commodity outweighed OPEC+ decision to extend supply cuts until March 2020.
Brent crude futures slid 42 cents to $64.64 a barrel, while US crude futures for August tumbled 38 cents to $58.71 a barrel.
OPEC+ continue to support oil prices with supply cut extension
To offset investors’ fears over weakening global demand for oil because of a myriad of macroeconomic headwinds, OPEC+ members agreed to extend supply cuts until March 2020.
However, despite OPEC+ members setting aside their differences to support oil prices, their efforts were not enough to offset investors’ fears of a global economic slowdown, driven by the US-China trade war and rising tensions in the Middle East.
‘It was the bare minimum OPEC could agree on in order to prevent a major meltdown in prices,’ PVM analyst Tamas Varga said in a note to investors.
‘Member countries noted that global oil demand growth for this year has fallen to 1.14 [million barrels per day] whilst non-OPEC supply is expected to grow by 2.14 mbpd.’
‘It appears that the supply side of the oil equation is supportive for oil prices, but demand concerns are forcing oil bulls to keep at least part of their gunpowder dry,’ he added.
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