The perfect storm has hit the oil market.
That’s according to Spencer Welch, a director on the Oil Markets and Downstream team at IHS Markit, who made the statement in a CNBC television interview on Thursday.
“I think it’s been a bit like the perfect storm has hit the oil market,” Welch said in the interview.
“It’s not just the change in tone from the United States in terms of the sanctions, it’s the normal downturn in demand at this time of year because of turnarounds, refineries doing maintenance work, the U.S. has jumped up in terms of production, so I think a number of factors have hit the oil market,” he added.
The IHS Markit representative stated in the interview that oil demand’s growth is still going up strongly.
“Around 1.5 million barrels per day of growth this year, we expect a similar amount next year,” Welch said in the interview.
“However, there are some sort of concerns that are starting to appear, for instance the trade war between the United States and China,” Welch added.
“We’re expecting that to reduce Chinese overall economic growth by around 0.3 percent next year … All of that does have a little bit of a downward push onto oil demand. Oil demand is still growing but maybe the optimism is not quite as strong as it was,” he continued.
Welch has more than 20 years of downstream technical, operational and economic experience, according to IHS Markit’s website.
IHS Markit describes itself on its website as “a world leader in critical information, analytics and expertise to forge solutions for the major industries and markets that drive economies worldwide”.
Earlier this month, Tamar Essner, energy director at Nasdaq IR Intelligence, said in a television interview with Bloomberg that she thought the market was overreacting.
“Oil markets tend to easily overshoot to both the upside and to the downside,” Essner told Bloomberg in the interview on November 14.
“I think that there are a lot of traders in the market that are algorithmically oriented and they’re linked to factors that are agnostic to the fundamentals of oil. They’re linked to the currency market, the stock market and a lot of things that make this a psychological reaction prompted more so than the abundance of physical supplies,” Essner added.
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