Could oil fall below $60? Here’s what’s moving crude prices

Global oil analyst Osama Rizvi of Primary Vision Network shares with Yahoo Finance’s Angela Barnes where he thinks oil prices could be heading - and the key events investors should be watching that could cause a market shift.

Video Transcript

- What's moving oil prices? Well, history has certainly taught us there is a direct correlation between economic events as well as geopolitical ones with what happens in the markets. So what should investors be watching that could cause another price shift? Well, we asked economist and global oil analyst, Osama Rizvi, Primary Vision Network for his thoughts.

OSAMA RIZVI: I think the oil prices are going to go down are headed lower because of the following reasons. First of all, we see that the OPEC plus cuts-- I'm not going to debate about whether they're going to include this or not and how is this going to reflect in the physical markets, but one thing is for sure, that these cuts reflect a tacit admission by OPEC and KSA and Saudi Arabia, as a confession that they do not see oil demand rising in the future.

This can be corroborated by another factor, which is the growing recession that you fears. Europe has entered recession officially. New Zealand has entered recession. Germany entered recession a few weeks ago. All the economic indicators in the US are also down. You look at the ISM manufacturing, non-manufacturing indices. You look at the electricity supplied and used by the industry. You look at other profits. So all of them suggest that recessionary factors are piling up.

This leads to another factor, or can be added to another factor, which is low Chinese demand. So China's reopening was expected to be one of the key events driving the demand for global oil specifically. However, what happened is that China's economic data continues to disappoint. Their PMI indices are below 50. That shows contraction.

The precipitation rates in China are falling owing to climate change. Therefore, China is facing a lot of issues, and the credit impulse is down. Credit impulse is actually down across major three economies in the world. So these indicators show that global oil demand might not be as much because the global economy isn't very strong at the moment.

Also, you look at Iran. So Iranian oil is back in the markets. It's about $1.6 billion barrels of exports. Highest since 2018 when it was 2.5 million barrels, their export. They're producing 3 million barrels per day and, according to some people, more than 3 million barrels per day. But what is happening is that the supply is overweighing demand.

So demand isn't there but supply is there. And Venezuelan oil is also there. Russian oil has been resilient so far. It has not gone down. So I think all of these factors make a good case that the downward pressures at oil will continue, and I think that oil prices might hit lower 60s before the end of the year.

- A final note. Remember, past performance is not a guarantee of future results. Do your own research and always remember your decision to trade depends on your attitude to risk, your expertise in this market, the spread of your investment portfolio, and how comfortable do you feel about losing money. And never trade more than you can afford to lose.