FUNDAMENTAL CRUDE OIL FORECAST: BEARISH

• Last week was rough for crude
• Chinese and German data disappointed, inventories rose
• The coming week may be no worse, but it’s hard to see durable price gains ahead

Crude oil prices are likely to remain biased lower as investors fret likely end demand in a world economy beset with horrific uncertainties and slowing obviously across many key regions. Prices have been biased lower all year on these worries and their slide has accelerated since mid-July.

It shows little sign of abating and, really, why would it?

Last week brought plenty of grim news. Germany’s economy was found to have contracted in this year’s second quarter raising the specter of technical recession in Europe’s engine room. US bond yields also slid, telling their own doleful tale about investors’ take on likely growth ahead.

CHINA, GERMANY ADD TO GLOOM

China’s industrial production figures also disappointed, sending oil prices lower an erasing rises won earlier in the week by news that the US was prepared to delay some tariffs on Chinese imports. US crude oil inventory data also flagged sharp stockpile gains, adding to the view that this market is at worst adequately supplied and at worst awash.

The coming week will bring more inventory numbers from the US Department of Energy. However, the overall market focus is likely to be well beyond these and rather on global economic prospects, trade headlines and the Kansas City Federal Reserve’s annual meeting of central banking heavyweights at Jackson Hole.

It’s very hard to see how the guest list there can be other than extremely cautious on the outlook even if they’re likely to put the best gloss they can on a discomfiting economic vista.

Good news on the US-China trade front will always have potential to lift energy markets. Markets may get some, but it’s sadly impossible to predict. On the basis of what investors can know about a weakening global economy, and the prospect of grim warnings from the Wyoming backwoods, it has to be a bearish call this week.