Pressure Weighs On Oil Market

Crude oil prices had been plunging for four days in a row since this week, pressured by few key factors. Previously, the oil market was receiving an upward momentum following trade optimism when the US and China stated that they are ready to sign the phase one of the trade deal during the Asia-Pacific Economic Cooperation summit in Chile. Further prompting its prices was the expectation of deeper supply cuts by OPEC+, as investors wait for further confirmation when they hold their meeting in December. 

However, the oil market had been suffering from negative sentiment throughout this week. According to the inventory reports by the American Petroleum Institute (API), and the Energy Information Administration (EIA), US crude oil inventory had an unexpected buildup last week, while heightened concerns of oversupply in the market. 

Besides that, recent trade optimism, which provided support for oil prices, turned against the commodity as uncertainties spiraled in the market. The APEC summit, which was supposed to be the venue for US President Donald Trump and Chinese Premier Xi Jinping, was canceled by the host country, Chile, due to violent protests happening in the country. Furthermore, China, on Thursday, brought up their doubts on reaching a long-term trade deal with President Trump. The quick change in sentiment caused investors confidence towards a possible trade truce to diminish. 

With ongoing concerns towards global demand for crude oil, a recent slump in manufacturing data from China and the US also further oil losses. China’s Manufacturing PMI fell below its’ expectation to 49.3, still signaling an overall contraction in the sector. Besides that, US Chicago PMI also drastically fell to 43.2, missing economists’ expectation of an already bearish outlook of 48.4. 

With the global recession haunting the market, adding on with concerns of lower global demand and oversupply in the market, oil bulls can only hope for possible trade optimism in the near term to help support falling prices.