WASHINGTON, D.C. (DTN) -- New York Mercantile Exchange nearest delivered oil futures and Intercontinental Exchange Brent futures edged up in midmorning trade Friday while lower on the week, pressured by renewed concerns over synchronized global economic contraction while the U.S. dollar continued higher in index trading.
In midmorning trade, Nymex March West Texas Intermediate futures were up $0.15 at $52.79 per barrel (bbl), with ICE April Brent fractionally higher at $62 bbl. NYMEX March ULSD futures were up 0.55 cents at $1.9060 gallon, and March RBOB futures gained 0.47 cents to $1.4305 gallon.
In a fresh sign of global economic slowdown, the European Commission sharply cut its growth outlook for the Eurozone for 2019-2020, as it expects EU's largest economies to be held back by trade tensions and domestic challenges, including Brexit uncertainty.
According to an EC report published Thursday afternoon, gross domestic product in the 19-member states coalition will average 1.3% in 2019, a downward revision from 1.9% forecasted in November. The Bank of England also cut its 2019 GDP outlook and sees the UK economy growing at its slowest pace since 2009 at 1.5% against an earlier forecast of 1.8%. Germany's Chambers of Industry and Commerce also lowered the 2019 GDP growth forecast for the country to 0.9%, sharply down from 1.7%. EU's three major economies Germany, France and Italy are struggling because of internal politics and slowing trade with China amid the U.S.-China trade dispute. The downward revisions Thursday afternoon affected the "risk-on" trade sentiment and the European market tumbled despite a lower euro.
In contrast with the euro, the U.S. dollar has strengthened significantly on the week, rallying to a fresh better-than five-week high at 96.49 in index trading, as the United States continues to outperform economies in Europe and China. The stronger dollar is adding selling pressure for WTI futures holders since the dollar is the predominant currency oil trades in globally.
On Thursday, U.S. President Donald Trump said he will not meet his Chinese counterpart Xi Jinping before a March 1 deadline to achieve a trade agreement, raising uncertainties over the trade deal between the United States and China. His comments came after White House advisor Lawrence Kudlow told Fox News that a "sizable distance" remains in U.S.-China trade talks.
Concern that the United States would hike tariffs on $200 billion in Chinese imports from 10% to 25% on March 2 triggered broad-based selling in equities Thursday. Last month, Trump said he expected to meet Xi before a trade deal would be agreed to, therefore it's not clear if Trump would delay the tariff increases set to take effect on March 2 as a result.
Trump will meet with North Korean leader Kim Jong Un on Feb. 27-28 in Vietnam to discuss denuclearization, and to potentially reach a peace treaty to the 1950-53 Korean War, which ended with a ceasefire not a treaty.
Liubov Georges can be reached at email@example.com
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