Oil prices have struggled to stay above the $60 per barrel price point. The latest swing in prices for the energy commodity has come from across the sea as signs of easing tensions in Hong Kong helped appease both the global stock markets as well as oil.
Prices for U.S. crude futures rose by 4.3 percent on Wednesday, hitting $56.26 per barrel after Hong Kong’s leader said she would withdraw the extradition bill that’s been the cause of the month-long riots that have ravaged the city. The world’s benchmark, Brent crude, also went up 4.2 percent today and reached $60.70 per barrel.
Worries of an economic decline have seen oil prices fall as the outlook for future demand remains shaky at best. Regardless, the easing of geopolitical tensions in Hong Kong is seen as a positive development for global markets. At the same time, there was some positive economic data to emerge from China, where a private survey of the country’s services sector showed that it had grown at the fastest rate seen in over there months. Being one of the top consumers of crude oil, positive economic data from the country, even if only temporary in nature, invariably lead to an increase in oil prices.
Investors and speculators alike should watch out for upcoming weekly government data on U.S. crude stockpiles, with the report being scheduled to come out on Thursday. Inventories are expected to fall by 2.1 million barrels for the recent week ending on August 30th, an expectation that also helped push oil prices up. However, worries of a long-term oversupply problem continue to linger among investors.
While oil prices have struggled to reach the highs that many experts had expected it would go to, other energy commodities have fallen to new lows as well. Across the Atlantic Ocean, natural gas prices in Europe have plunged to 10-year lows on oversupply problems. An overabundance of gas coupled with mild demand has led to storage facilities being fuller than they ever have been, currently at 92.95 percent storage capacity according to data from Gas Infrastructure Europe. Europe’s winter heating season, which begins in October, is also expected to have higher than normal temperatures, further hurting demand for natural gas.
Prices for Brent Crude hit their highest point this year in late April when it reached the $74 per barrel price point. Since then, prices have been tumbling back down, prompting OPEC to issue a warning that should prices fall below $50 per barrel, they would further reduce output to stabilize prices. Earlier efforts from the cartel helped bring oil prices back from the brink in late 2018 where they had reached a new 52-week low. Since then, however, America’s growing energy output has threatened to undo OPEC’s efforts as the United State’s growth in supplies has helped push prices for oil back down.
The worst-case scenario for oil prices would be if the trade talks between the U.S. and China break down completely. While that situation is still in the distant horizon, experts have warned that prices could fall down to $40 per barrel if things got out of hand.