06.09.201915:23 Forex-elemzések és áttekintések: Oil under attack - Citi

Assessing the current situation in the black gold market, analysts at the largest Citi bank are pessimistic. They are confident that the price of oil will fall amid continued trade wars, casting doubt on the achievement of an agreement between the United States and China.

Experts draw attention to the fact that so far there have been no positive changes in the framework of the trade confrontation. Moreover, Beijing and Washington exchanged new blows in the form of trade duties and the next round of negotiations is scheduled for October this year.

Citi analysts believe that investors will continue to assess the growth prospects of the global economy as negative, and the situation with the trade conflict between the US and China adds fuel to the fire in this matter. Experts do not exclude that this confrontation will last until the end of 2020 when the election campaign starts in America.

Citi expects a slowdown in oil demand next year. Experts also downgraded the forecast for Brent from the previous $72 to $62 per barrel in the third quarter of 2019. In the fourth quarter of this year, it is expected to decline to $64 per barrel instead of the previous forecast at $74. By the end of 2020, bank analysts predict a reduction in the cost of raw materials to $54 per barrel despite the extension of the OPEC + agreement.

The pessimistic picture is slightly diluted by the positive points that Citi points out. These include low oil production growth in the United States and a slight decrease in raw material reserves in the country. In general, the situation cannot be called dramatic since the drop in oil prices is only a reflection of global financial changes, experts emphasized.