Oil prices have been falling for seven consecutive weeks. On Friday, US oil slid 8%, while the global benchmark for oil prices (Brent crude) was down 6.6%, down to $60 per barrel.
Any wise investor knows to look to the market’s economic environment before anticipating whether prices will rise or fall. The same can be said about why prices rise and/or fall. As 2019 is fast approaching, it appears we are heading towards a widespread economic slowdown, and this is bound to effect prices and should be factored in accordingly.
Markets & Money resource analyst Jason Stevenson tells you all this in his report, as well his top 10 mining stocks. You can read more about it here (for free).
Oil prices supply/demand balance
Oil’s falling price has a lot to do with its supply/demand balance. At this point in time, we are seeing production outperforming demand.
Inventories in Singapore’s refineries are at their highest level in three months. You may have already seen some of the benefits. The main one being fuel prices, the average tank in Australia fell by almost $12 in recent weeks. And this declining trend in oil prices is likely to continue.
Another thing dragging the price of oil down is a strong US dollar, from lifted interest rates which is moving investor money out of other currencies and into assets.
As with any supply or demand network, there’s pressure from both sides. And with the Saudi-led OPEC cartel next month, the pressure is mounting. According to the ABC, Trump is leaning for the Saudis to keep production high and prices low, while budgetary issues in OPEC states determine whether prices need to hike back up.
Oil supply 2019 overhang
The downward pressure in oil prices is stemming from an oversupply, combined with a slowdown in demand. This is expected to carry over into 2019, creating an oil overhang.
Greg Mckenna, an independent financial analyst from Australia, described what was happening in the markets as an ‘utter capitulation in crude oil’.
And of course one thing to keep an eye on is the US–China trade war, because a risk to global trade from the world’s two biggest economies is bound to affect oil prices.
For Markets & Money
PS: Aussie investors have seen great results from oil investments in the past. But Markets & Money resources analyst, Jason Stevenson believes that your best opportunities lie in smaller, more speculative stocks which aren’t restricted to iron ore. The kind that could see massive share price moves from a single positive drill-hole result. For 10 of his favourite mining stocks on the Aussie market this year, download his free report ‘Top 10 Mining Stocks 2018’ today.