“With a trade deal looking highly unlikely in the short term, bullish supply factors are likely to remain a secondary concern. As such, we have cut our 3mth price target for Brent to USD65/bbl.”
“Trade talks took an abrupt turn when US President Trump announced a 10% tariff on a further USD300bn of Chinese imports. And while he has subsequently delayed its implementation, it’s clear both parties are still far apart. We recently looked at the implications of a global recession on oil demand. While that isn’t our base case, its probability is rising by the week.”
“We still believe fundamentals are constructive, with the market tightening in H2 2019. Supply constraints persist, and Saudi Arabia’s commitment to further restraint is highly supportive. Refining margins are also elevated, and likely to see further upside as IMO buying increases. However, they are likely to take a back seat while the trade conflict persists.”
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