Oil Price Fundamental Daily Forecast – Traders Dealing with Oversupply Issues, Demand Worries

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading flat-to-higher during the pre-market session Friday. Although momentum has shifted a little to the upside the last couple of sessions, both markets remain in a position to finish lower for a third straight week.

At 0915 GMT, September WTI crude oil futures are trading $68.30, up $0.06 or +0.10% and September Brent crude oil is at $73.08, up $0.50 or +0.69%.

Fundamentally, the main concerns for investors are oversupply and lower demand due to a possible economic slowdown caused by the trade conflict between the United States and China, a pair of the world’s two biggest crude oil users.

Oversupply has been a concern since some production returned after outages. This is on top of increased production from Saudi Arabia, Russia and the United States, which set a record last month with 11 million barrels per day production.

Trade tensions between the U.S. and China have stoked fears of damage to their economies and commodities demand. China’s currency is falling as the People’s Bank of China pushes its currency lower. This making traders nervous because it suggests not only a trade war, but a currency war may be brewing.

Lower crude oil demand in the U.S. and China caused by an economic slowdown from their trade war would have a tremendous impact on the crude oil market.

Oversold conditions have put the WTI and Brent futures contract in a position to mount a short-covering rally, but this is likely to be a short-lived move because the fundamentals at this time are overwhelming bearish. Oversupply is one factor, however, things could get worse if the trade dispute between the U.S. and China drags down the global economy.