Oil prices were mostly flat on Wednesday morning, amid signs that U.S. shale growth is slowing down and that major Asian economies will be rolling out fiscal stimulus to boost growth.
At 11:30 a.m. EST on Wednesday, WTI Crude was trading up 0.06 percent at $53.04, while Brent Crude was up 0.05 percent at $61.53.
Oil prices recovered slightly on Wednesday morning from Tuesday’s losses, which were driven by investor fears of global economic growth slowdown. Weak Chinese and South Korean economic data and the International Monetary Fund (IMF) cutting its forecasts for the global economic growth to 3.5 percent in 2019 and 3.6 percent in 2020 rekindled investor concern over the global economy, depressing financial and oil markets and sending investors to safe-haven asset classes such as gold and Treasuries.
Another bullish driver on Wednesday morning was the EIA’s monthly Drilling Productivity Report which showed expectations that the key U.S. shale regions will see their combined crude oil production growing by 62,000 bpd in February over January.
If the forecast turns out right, this would be the slowest growth month on month in the major U.S. shale plays since May 2018, according to Warren Patterson, Head of Commodities Strategy at ING.
Oil prices were also supported early on Wednesday by signals from China and Japan that they would use fiscal spending to stimulate growth. These signs that major Asian economies will not let growth slow down too much gave some hope to oil market participants, easing concerns from earlier this week about the pace of global economic growth and by extension, global oil demand growth.
This week, the next two major catalysts for oil prices will be API’s inventories report later on Wednesday and the EIA inventory report on Thursday.
Last week, the EIA reported a crude oil inventory decline of 2.7 million barrels for the week to January 11, but also a major gasoline build of 7.5 million barrels.
By Tsvetana Paraskova for Oilprice.com
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