admin
DUBAI. — Having rallied strongly from a 13-year low in early February, moving into a net positive for 2016 as a whole and recording the best monthly advance for a year, the oil price recovery has stalled in recent weeks.
According to a panel of investment bankers, the current narrow price range of around $40 a barrel for international oil may now persist for the rest of the year.
Reuters reports that prices nudged higher on Thursday following a poor start earlier in the session after new data showed a draw-down in stocks at the key Cushing, Oklahoma storage site that is the main hub for US crude oil futures contracts. In a separate report Reuters notes that the overall US supply also dipped slightly to a little less than 9,18 million barrels a day, the lowest since October 2014.
International benchmark Brent crude had fallen below $39 a barrel earlier in the day as a result of fresh concerns over a deal among global oil powers to freeze output at January levels, but it eventually settled above $40. This morning it was down a little but still above the $40-a-barrel threshold.
This means that for the month of March as a whole Brent rose 10 percent – and it was 3 percent up over the first quarter as a whole. In that time it slumped to a low of $27 a barrel early on in February, before bouncing back more than 50 percent after Saudi Arabia and Russia agreed a tentative deal to stop increasing supplies.
But a panel of 13 investment bankers polled by the Wall Street Journal reckons the price, which has frequently run out of steam at between $41 and $42 a barrel, may not advance further in the coming months. Even their increased forecast estimates a 2016 average for Brent of only $40 a barrel, with a second quarter price lower than the current price at around $37.
Among the reasons for this is the feeling that a supply deal may not hold as this week Saudi Arabia announced it was re-opening a 300 000-barrel-a-day oil field it runs jointly with Kuwait. In any case the market is too overstocked for a freeze at high January output to rebalance supply any time soon, some argue.
Elsewhere there are worries that US pumping remains remarkably resilient – and that nimble shale producers will return to the market if prices go above $45 a barrel, making the rally “self-defeating”.
Overall “there is very little bullishness”, said Michael McCarthy, chief market strategist at Sydney’s CMC Markets. — theweek.
Online Reporter