Byline: Shabbir Kazmi
All the indicators suggest that global crude oil market is suffering from supply glut, mainly because of high shale oil production. Nothing seems to be moving oil price in any way other than Sino-US trade war. The Western media is still trying to prove that very thing hinges on the two powerhouses striking a deal, be it global economic growth or oil demand. Any attempt to try to create bullish sentiments seems completely artificial and far away from ground realities.
The markets appear to have turned decidedly bearish with supply/demand imbalances drowning out everything else to the extent that even an epic event, attack on Saudi Aramco oil facilities proved storm in a cup of tea. The event that could have caused the biggest supply disruption in the history only provided a temporary support for prices.
The Western media is still busy in creating illusion by suggesting several scenarios that could induce rally in oil markets and put prices on upward trajectory once again. It is suspected that once a trade deal is reached, then geopolitical risk will again be able to create upsets and the often used recipe will be the rig count, which often creates the highest deception.
During the first week of November 2019, hedge fund bets on US benchmark, WTI that took its price to new highs. Even though US shale producers are pumping crude like crazy and adding to supply, hedge funds see reduced drilling as a sign of lower production next year.
It can't be ruled out that Western media will use three scenarios for pushing oil prices higher in the near-and mid-term:
The long-running trade war between the world's two biggest economies has brought about a general malaise to the global economy. Negotiations between Washington and Beijing have been long, intermittent and protracted with plenty of confusion.
It is often said, all's well that ends well - finally, there seems to be some light at the end of the tunnel after the Trump-led team announced they have finalized 'Phase One' of the trade negotiations. Oil markets have largely remained indifferent, underlining just how much damage the trade spat has wrought on the global economy. Maybe all those platitudes about confidence bouncing back after an initial deal were a touch optimistic.
Rising geopolitical risks, particularly in the Middle East - home to more than 60 percent of the world's oil reserves is bullish for oil. Tensions between Iran and Saudi...