Oil market balance calls for stable prices, investments

Oil market balance calls for stable prices, investments

Global oil prices climbed 35% in the first four months of 2019 as major producers reined in output and countries from Iran to Venezuela suffered involuntary cutbacks in supply. Yet crude has since dropped more than 10% amid concerns that demand will ebb. The main culprits: Rising shale production, a slowing global economy and the prospect of a deepening trade war between US and China. The International Monetary Fund has cut its forecast for economic growth in China – the engine of demand for commodities – to 6% next year, the lowest since 1990 and less than half the peak of 14.2% in 2007. A global recession could start within nine months if US President Donald Trump imposes 25% tariffs on an additional $300bn of Chinese exports and Beijing retaliates, according to Morgan Stanley. JPMorgan Chase & Co has said the probability of a US recession in the second half of this year had risen to 40% from 25% a month ago. A full-blown tariff conflict could cut about $600bn off global growth by 2021, according to Bloomberg Economics. The shale boom keeps booming. US supplies will dominate oil markets for years to come, satisfying 80% of global demand growth to 2020, according to the International Energy Agency. Production from the prolific Permian Basin will double over the period and the country’s total liquid hydrocarbon output will rise to 17mn bpd from 13.2mn in 2017. Russia now has voiced concerns that falling oil demand could send prices below $40 […]

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