Brent crude oil has once again moved to within striking distance of the key area of resistance around $80/barrel. The bounce last week before even testing support at $75/b indicates how traders remain more concerned about the short-term outlook for supply than a potential future risk to demand from slowing emerging market growth.
This was also highlighted in recent weeks by the changed behaviour among leveraged funds. After cutting their combined bullish oil bets in Brent and WTI from a record 1.1 billion barrels to 666 million between February and August, they picked up 137 million barrels during the past couple of weeks. In its Monthly Oil Market Report for September
, meanwhile, Opec highlighted the potential future risk to demand when saying that trade tensions, monetary tightening by central banks, and the financial problems of some emerging nations “constitute challenges to the current global economic growth trend.”
While not yet showing up in the official demand growth forecast for 2019, the cartel nevertheless said that “it will be essential to monitor the uncertainty in currency and financial markets.”