Oil Prices Experience Volatility Amid Economic Concerns and Supply Dynamics

A very choppy start to the week for oil prices

Oil prices have been very choppy at the start of the week as traders digest weaker economic prospects against higher Iranian output and a slightly more modest rate cut in China. There are so many moving parts at this stage but at this point in time, there’s more negative than positive as far as the crude price is concerned.

Additional supply from Iran is undermining Saudi Arabia’s efforts to desperately manipulate prices higher with production cuts. China’s recovery is also not taking off as many thought earlier in the year and stimulus efforts have thus far not been as powerful as they could have been. I expect both of these will change in the second half of the year but for now, it’s not helping oil prices.

What’s more, countries are struggling to rein in inflation – the UK this morning a prime example of that – and that’s going to dampen growth and threaten recessions across the globe. This summer was crucial in determining the scale of the job still to do and so far, investors arguably have more cause for pessimism than optimism.