Commerzbank warns of potential drop in oil prices
1/30/2017
Brent futures slid to $55.52 from $58.35 (January high) as investors got signals of growing production in the United States that can potentially offset the output cuts implemented by several OPEC members. Baker Hughes rig count climbed by 15 to 566 last week. Donald Trump in his first days as the US President positions himself as protectionist and advocate for the resurgence of the US energy industry.
Oil prices were steady in January hovering above $50 as OPEC members and allies fulfilled their promises under the collective agreement. Saudi Arabia, Kuwait, and Algeria said that they had cut output this month by even more that it was required. Russia convinced the market that it’s curbing production faster than it was suggested. The oil market was showing resilience having refused to react to such bearish news as the buildup in the US oil inventories and rigs number. So, at the present time, many investors buy are buying oil futures with expectations that prices will continue their rally in the near-term future.
Analysts from Commerzbank call on investors not to be too joyful beforehand and warn them of an imminent decline in oil prices as soon as countries start refusing to adhere to output cuts. Another drag on oil prices – any indication of the growth of the US oil industry (rise in drilling activity, the restoration of pipelines). An additional factor that may contribute to the oil prices’ downfall is Iran’s intentions to increase oil production after international sanctions eased last year. Now, the country persistently seeks funding and technology from abroad to open about 70 oil and natural gas field as soon as possible.
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https://new.fxbazooka.com/analytics/12250