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Leon Mathias

Why are crude oil prices falling this week and will the slide continue?


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Crude oil prices are sliding for the third session in a row with WTI crude for July delivery (CLN19) trading on the Nymex down more than 2 percent at $60.40 a barrel at 4.00 PM GMT on Thursday, the lowest since March for the most active contract. Brent Crude for July (BRNN19) shipments trading on the Intercontinental Exchange was at two-week lows of $69.75. The sharp pullback in crude prices is the outcome of: 1)    Escalating trade tensions between the US and China 2)    Demand-supply stats The mounting trade tensions between the world’s top two economies has affected the economic growth of the other countries as well, leading to a sharp fall in domestic household consumption on one side and exports on the other, and ultimately a drop in oil demand. The second factor is the growing crude supplies from the US, which climbed for the second week in a row, according to data from the Energy Information Administration on Wednesday. Added to that is the domestic production which jumped by 100,000 barrels last week to 12.2 million barrels per day. The outlook for crude oil, however, may not be all bearish, with the fall likely to be capped by escalating tensions in the Middle East and OPEC led production cuts.  

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