Crude oil futures dipped in mid-morning trade Asia Monday as risks of a downside in demand outweighed lingering concerns of tightening supply. At 11:30 am Singapore time (0330 GMT), ICE March Brent crude futures were down 28 cents/b (0.45%) from Friday’s settle at $61.36/b, while the NYMEX March light sweet crude contract was down 38 cents/b (0.71%) at $53.31/b.
“Political turmoil in Venezuela threatened to tighten crude supply, but concerns over surging US fuel stocks and global economic woes weighed on sentiment,” UOB analysts said Monday. Market watchers continued to monitor further developments of the US-China trade talks, which remains a key driver for demand prospects and trading sentiment, analysts said. “Brent crude prices appear to hold this inverse head-and-shoulder pattern, waiting for further upsides but the true driver for prices remain with demand issue,” IG market strategist Pan Jingyi said Monday.
“Should China’s PMI disappoint, and US-China talks conclude without a positive rhetoric, prices may be susceptible to further downside once again,” Pan added. The latest round of US-China trade talks would take place later in the week. In the meantime, supply concerns lingered as the US may levy sanctions on Venezuela’s oil sector in response to an ongoing political crisis in that country.