RBC: Expect Oil Markets To "Be Sloppy Until Year-End"

Despite oil clawing its way up by 3 percent on Friday with Brent and West Texas Intermediary settling at $46.83 and $44.44 per barrel respectively, crude prices still ended the week lower based on oversupply concerns.

Carl Larry Director, director of business development for oil & gas at Frost & Sullivan, said, "It's quite likely oil will hold at mid-$40 levels; more telling of how oil performs will be the rig count in coming weeks and OPEC gestures to support prices" – a reference to rising U.S. oil rig counts and the Organization of the Petroleum Exporting Countries freeze talks in Algeria.

In assessing the factors that have contributed to oil's wild ride for the past month, Helima Croft, global head of commodity strategy for RBC Capital Markets, said that even if OPEC members reach a deal, crude prices will "be sloppy until year-end."

Pointing out that a deal would do little to affect oil supply, she told CNBC's Worldwide Exchange, "This is all a sentiment game at this point; I think sentiment has been driving the market, and so I think if you have the sense that OPEC could do something, it does firm a floor and potentially moves us four or five bucks higher on the day."

But a sloppy market and oil in the mid-$40s does not strike fear in everyone's heart: just before markets closed on Friday and oversupply issues weighed heavily in the minds of investors, Scott Sheffield, chairman and CEO of Pioneer Natural Resources Co., told Bloomberg that the break even price for drilling in the Permian Basin in Texas is "sub-$30" per barrel.

Capping oil's tumultuous week is Venezuela, which may yet prove to be the elephant in the room with regards to the direction the market might take in the closing months of 2016: it reported the quashing of a plot this week involving explosives and a sniper's rifle to topple president Nicolas Maduro.

The Maduro government in its death throes and the country in near economic and social collapse could, presumably, seriously disrupt any attempt to impose and maintain a global production cap - which in turn would mean more chaos for oil prices.

In April, RBC warned that the oil-driven economies of Algeria, Iraq, Libya, Nigeria, and Venezuela will collapse if the oil market didn't soon stabilize.