Petroleum prices likely to tumble by Rs5 next month

British crude oil settled at $70 a barrel, whereas U.S. Brent Crude fell by $8.

KARACHI (Dunya News) – The government is likely to revise prices of petroleum products by Rs5 as oil prices in the international market tumbled, reporting a significant decrease of $11 per barrel in crude oil prices within the last two weeks.

The effects of Sino-U.S. trade war have begun to appear with a reduction in demand for crude oil in the global market. China and United States are world’s two biggest oil consumers, and resultantly the conflict between them is heavily impacting on the prices of oil.

Oil prices tumbled 4% on Wednesday to their lowest settlements in nearly five months, weakened by another unexpected rise in U.S. crude stockpiles and by a dimming outlook for global oil demand.

British crude oil settled at $70 a barrel, whereas U.S. Brent Crude fell by $8 and traded at $51 per barrel.

Economists have optimistic views about the fall in prices of crude oil in the international market for Pakistan; however consider control in further devaluation of rupee against the US dollar, crucial for the reduction in prices of petroleum products in the next month.

Besides, if the conditions would meet as mentioned, then inflation in the country could also be controlled.

U.S. President Donald Trump on Wednesday said he had a feeling that a trade deal could be reached, while again threatening to increase tariffs on Chinese goods if they do not make a deal.

Hedge fund managers are liquidating bullish oil positions at the fastest rate since the fourth quarter of 2018 due to increasing fears about the health of the global economy.

Goldman Sachs said an uncertain macroeconomic outlook and volatile oil production from Iran and others could lead OPEC to roll over supply cuts.

With the next meeting of the Organization of the Petroleum Exporting Countries set for the end of June, the market is looking to whether the world’s major oil producers will prolong their supply cuts.

OPEC countries and non-member producers including Russia, have limited their oil output by 1.2 million barrels per day this year to prop up prices.

The energy minister of the United Arab Emirates, Suhail bin Mohammed al-Mazroui, said on Tuesday that OPEC members were close to reaching an agreement on continuing production cuts.

Algeria has floated an idea of increasing an oil supply cut by OPEC and its allies in the second half of 2019 as demand falters, OPEC sources said, although rolling over current output curbs is still the most likely scenario.

With input from Reuters