Oil was steady on Wednesday as signs of a global economic slowdown were countered by OPEC-led supply cuts which helped support Brent crude futures above $60 per barrel.
International Brent crude oil futures were at $60.66 per barrel at 0444 GMT, 2 cents above their last close.
U.S. West Texas Intermediate (WTI) crude futures were flat from their last settlement, at $52.11 a barrel.
“Fundamentals offer no clear price direction,” said Norbert Ruecker, head of commodity research at Swiss bank Julius Baer.
Prices were prevented from rising as signs of a global economic slowdown mounted.
China, Asia’s biggest economy, faces rising trade uncertainties this year, a commerce ministry official said on Wednesday, after the government earlier this week reported poor December trade data, with both exports and imports contracting from a year earlier.
In Japan, core machinery orders slowed sharply in November in a sign corporate capital expenditure could lose momentum as a bruising U.S.-China trade war spills into the global economy.
Adding to the trade woes, the U.S. economy is taking a larger-than-expected hit from a partial government shutdown, White House estimates showed on Tuesday, as contractors and even the Coast Guard go without pay and talks to end the impasse seem stalled.
The outlook for the global economy darkened further when British lawmakers on Tuesday overwhelmingly rejected Prime Minister Theresa May’s deal to leave the European Union.
OPEC cuts support crude
Despite this, oil markets are receiving support from supply cuts started late last year by producer group the Organization of the Petroleum Exporting Countries (OPEC) and major non-OPEC producer Russia.
However, surging U.S. crude oil production, which hit a record 11.7 million barrels per day (bpd) late last year, threatens to undermine the OPEC-led efforts.
U.S. crude oil output is expected to rise to a record of more than 12 million bpd this year and to climb to nearly 13 million bpd next year, the U.S. Energy Information Administration said on Tuesday, in its first 2020 forecast.
With so much uncertainty around demand and supply, the outlook for oil markets is unclear.
Oil prices are expected to oscillate close to current levels, according to a large annual survey of energy professionals conducted by Reuters between Jan. 8 and 11, with Brent prices in 2019 expected to average $65 per barrel, unchanged from surveys in 2016, 2017 and 2018.
“The oil market remains amply supplied and prices are set to trade rangebound,” Ruecker said. “Softening demand makes too-high prices short-lived … Similarly, (supply) cuts and slowing shale output make too-low prices short-lived.”
Source: Reuters
