A slight price recovery on Friday couldn’t save what turned out to be the worst week this year for oil markets.
Brent is currently hovering around $68 per barrel having fallen from a $74 high earlier this year. Increased worries about a possible oil slump, due to the perceived negative impact of the escalating US trade war with China, and unexpected higher stock volumes, have scared mainstream analysts it seems. It seems that the oil market is not being ruled by bulls or bears, but is being sheepish instead.
The market is set for a recovery in the coming weeks, especially if markets continue to overreact to the downside. At the same time, geopolitical risks are much higher than the market wants to admit. A possible proxy-war in the Middle East is a real possibility, with Iraq or Yemen as possible targets. A new confrontation would remove the current ceiling of $75 per barrel with a bang. Observers should be wary of the current bearish narrative in the global oil market.