Also in this brief: US crude inventories drop, Analysts peg oil price at $40 to $60 for next year or more
Oil prices slip in choppy trading
In early trading on Thursday, oil prices topped the $50/barrel mark for the first time since June, but as the day wore on, concerns about the global oversupply was a drag on prices.
The early rally followed a release of data on Wednesday by the US Energy Information Administration that showed a significant drop in US crude and gasoline stocks.
But, by 1:05 EDT, Brent futures were down 21 cents to $49.47/barrel and US WTI futures were at $46.93/barrel, down 19 cents from Wednesday.
Analysts say the market is watching for indications from Saudi Arabia that the kingdom may consider additional supply cuts to bring markets back to balance.
Stock markets and the US dollar are also being impacted by the Robert Mueller investigation into Russian influence in the 2016 US election as the special counsel is now looking into the president’s business transactions.
According to the Financial Times, the Saudis are considering a report by a consultant arguing for increased supply cuts. On Tuesday, Reuters reported the kingdom is committed to working with other countries to draw down inventories.
US commercial crude oil inventories drop – EIA
US commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.7 million barrels from the previous week. At 490.6 million barrels, US crude oil inventories are in the upper half of the average range for this time of year. Total motor gasoline inventories decreased by 4.4 million barrels last week, but are in the upper half of the average range.
US crude stocks remain well above the five-year average and US production has increased almost 12 per cent since mid-2016 to 9.4 million b/d.
US crude oil imports averaged 8.0 million barrels per day last week, up by 386,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.8 million barrels per day, 1.7% below the same four-week period last year.
Analysts, wealth managers peg oil price at $40 to $60 for next year or more
U.K.-based wealth manager Coutts, a private bank, issued a mid-year investment outlook that expects oil to stablize.
“After big ups and downs in the last 10 years, we expect the oil price to stabilize in the $40-60 range for the next year or two,” the report said.
“This is partly due to the stabilizing effects of U.S. shale production, which becomes profitable with oil at about $50 per barrel. As a result we don’t expect the oil price to move far from this level.”
“The investment themes we set out at the beginning of the year have performed well, and we continue to see potential for growth in these areas,” said Mohammad Syed, managing director and head of global markets at Coutts, in a press release.
“In the meantime we’ve added emerging market bonds to our portfolios and funds, to benefit from strengthening economies in the developing world. As ever there are risks on the horizon but uncertain times bring new opportunities into view.”
Hans van Cleef, senior energy economist at ABN Amro: “I lowered my 2017 year-end forecasts for Brent from $60 to $57 and WTI from $60 to $54. I do see more upside potential for oil prices from (the second half of) 2018,” he told CNBC via email.
“In my view, the market is too negative and ignores the bullish arguments. Strong global demand, declining (U.S.) stocks, the low investments in the sector and a weaker dollar should be supportive for oil prices in the longer term.”
