EMEA News
Credit Suisse: More Negatives Than Positives for Crude Prices, But No Move Back Into The $30s
A new wave of critics have taken to the air insisting that predictions made just 24 hours earlier that crude will eventually hit a bottom in the $30s is perhaps too severe a scenario.
David Hewitt, co head, global oil & gas supply for Credit Suisse, told CNBC that "Of the signposts we're going to look at in the very short term, there are more negatives than positives.
"Does that mean we're heading back into the $30s territory? No."
Hewitt did, however, call out Saudi Arabia for its increasingly familiar stance of "posturing, production, and IPO-ing," referring to the kingdom's habit of stating it may be amenable to a production freeze, increasing its output anyway, and then moving to consolidate an IPO, which in this case pertains to the partial sale of state-owned Saudi Arabian Oil Co., the proceeds of which will presumably go towards diversifying the Saudi economy.
This led Hewitt to briefly touch upon the impending freeze talks among Organization of the Petroleum Exporting Countries (OPEC) members next month in Algeria, which he dismissed as not having any effect on real supply even in the unlikely chance an agreement is reached.
Hewitt's basic outlook is shared by Peter Botten, CEO of exploration firm Oil Search, who, upon reporting an 89 percent drop in half-year profit due to weak oil and natural gas prices, told media he is a "reasonable pessimist" about the next 12 to 18 months and predicted that prices will not go significantly lower than where they are now.
He also thinks the market will rebalance over the next two to three years.
Arguably, the most interesting aspect of the recent wave of contradictory market predictions is how the OPEC freeze talks have tended to be a minor talking point and generally dismissed as not important; this was reinforced by Goldman Sachs strategists writing in a note on Monday that the market is not going to recover any time soon, and that the gargantuan global oversupply and persistent overproduction will cause crude to remain in the $45-$50 range through next summer.
Of the analysts who have offered the darkest near-term outlooks in the past week or so, Kyle Cooper, a consultant with Ion Energy Group, stands out from the pack: earlier this week he told CNBC the real problem is that U.S. petroleum inventories have built at the same pace as last year, which was a record bearish trend, and unless this is resolved oil will drop later this year to "the mid $30s", with "real demand not kicking in until 2017 or even `18."
