US slowdown fears push oil prices southwards

Issues like OPEC’s production cuts and US sanctions on Iran and Venezuela were eclipsed by concerns of an economic slowdown in the US combined with increased inflation expectations. These concerns were a result of bearish statements coming from the Federal Reserve, which led the 10-year treasury yields to touch their lowest levels since early 2018.

Brent crude and US West Texas Intermediate (WTI) slipped more than 3 per cent since last week. Fears of a global downturn were accentuated by the manufacturing data coming out of Germany, which shrunk for the third straight month. Germany is Europe’s largest economy.

OPEC along with its non-affiliate allies like Russia, also known as ‘OPEC+’, have stated their intentions to cut production by 1.2 million barrels per day (bpd) to increase prices. Saudi Arabia, OPEC’s de facto leader is pushing for an oil price in excess of US$70 per barrel. Saudi Arabia, the world’s largest oil exporter intends to reduce March and April oil production to about 10 million barrels per day, which is below its official OPEC output target of 10.3 million barrels per day. Brent crude oil futures were trading at US$66.8 per barrel, down 0. 4 per cent from their last close.