Cohen says Barclays expects a flat performance from oil in 2019 in spite of the geopolitical environment because US shale production is likely to ramp up, replacing some American demand in the global market with increased supply.
So, the market is betting on supply that may be there later but it is clear that it is not here now.
Oil prices fell on Tuesday, depressed by concerns that the U.S. Still, U.S. crude oil futures prices lost 2.2 percent for the week, marking the third straight weekly loss. These numbers are in line with seasonal trends; oil inventories typically rise as refineries re-tool for winter product blends.
According to Reuters, Saudi Arabia pumped 10.65 million bpd in October, taking the combined output from the top three oil producers at a record 33.41 million bpd.
According to the data released by the U.S. Energy Information Administration, crude oil inventories increased by 3.22 million barrels in the week ended October 26, less than forecasts for an over 4 million barrels increase.
Consultancy JBC Energy said the oil price weakness was "probably driven by the wider negative market sentiment amid speculation about additional US tariffs on Chinese imports, should upcoming talks fail to produce the desired results".
Crude oil prices have already declined significantly over the last month, going from a high of almost $87 per barrel on October 3 to about $72.55 per barrel on Friday. Saudi Arabia and Russian Federation have said they will pump enough to meet demand once US sanctions are imposed.
Meanwhile, Russia raised crude and condensate output to a record of nearly 11.41 million barrels a day in October, according to a government official, who asked not to be identified.
"The bulls got ahead of themselves, but not for a bad reason - spare capacity is indeed very low relative to demand growth at a time when we have big suppliers that are necessarily going to be exporting less for the foreseeable future", Essner said, referring to Iran and Venezuela. That's a post-Soviet record, and not far off the highest-ever production.
China for example, has already said it would continue to buying Iranian oil, despite Washington's threat to block Chinese companies from doing business in the U.S. Then again, China doesn't seem greatly concerned with the threat, given the current trade war.