After rising strongly this week, the price of oil is likely to remain supported in the short term by clear signs of lower supply from OPEC (mainly Saudi Arabia) and the loss of Iranian and Venezuelan barrels. However, we think that slower growth in demand this year, as the global economy softens, will result in renewed downward pressure on prices. We forecast that the price of Brent will fall to $50 per barrel by end-2019, down from over $65 today.
Meanwhile, US-China trade talks are set to resume next week in Washington. Both sides claim that progress is being made but we sense that some key sticking points remain. That is not to say that there may not be a “memorandum of understanding” announced, which would inevitably give a lift to commodities prices. Otherwise, it will be a quiet week for market-moving data, not least because we have to wait until March before China publishes its January/February data.
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