After a series of oil price hikes that lasted for four weeks, oil prices fell at the end of last week due to weak economic data in China as well as pessimistic figures from the International Monetary Fund (IMF) on the growth of the global economy. The increase in US crude production has also affected prices.
Venezuela was in the spotlights of the world economic scene due to the political events that hit the country, especially in the capital, Caracas. This led to increased global fears of the disruption of Venezuelan oil exports soon, especially after the threats of US President Donald Trump to impose sanctions on Venezuela. Events in Venezuela are also very important for the oil markets now, because Caracas will take the rotating presidency of OPEC this year.
Oil prices have also fallen due to a slowdown in the global economy, which has hurt oil prices, especially as the International Monetary Fund (IMF) lowered its forecast for global economic growth in 2019, which fell from 3.7% to 3.5%. Also, we need to take into consideration the presence of other important factors which contributed to the recent trends in oil prices, the most important of which are the trade tensions between the United States and China and the Brexit problems. China’s economic slowdown is already causing concerns regarding the global economy. It is enough to know that oil prices have not moved after China released data showing China’s economy grew by 6.6 percent in 2018, its slowest growth in 28 years. The number fell from the previous rate in 2017, which was 6.8%.
Even in late 2018, China’s economic growth between September and December was 6.4%, down from 6.5% in the preceding quarter. Although the slowdown is in line with expectations, the slowdown of the second global economy casts a shadow on global growth.
US Inventory Report
In the United States, data from the EIA showed that gasoline inventories in the United States jumped to a record high in the last week even as refineries reduced activity. Gasoline inventories rose for the eighth week in a row, by 4.1 million barrels to a record 259.6 million barrels, compared to expectations of a 2.7 million barrel increase.
Crude oil inventories rose by 8 million barrels a week against expectations of a 42,000 barrel drop. Crude prices in refineries fell to 74,000 bpd. Refinery utilization rates fell 1.7 percentage points, but remained relatively strong at 92.9 percent of capacity.
Chinese officials will arrive in the United States on Jan. 30 for the next round of negotiations aimed at finding a solution to the long-term trade tensions between the two countries. The two sides have already made concessions, but the main discussion points include intellectual property protection and how to control any agreement.
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