Americas News
Oil Prices Firm and Bulls See Crude in the $60s
What a difference a day makes: just 24 hours after crude plummeted 4 percent in reaction to the Organization of the Petroleum Exporting Countries (OPEC) agreeing to extend its production cutback initiative by 9 months but at the same rate, the market on Friday held steady - and now some observers think oil could climb to as high as $65 in the near future.
West Texas Intermediate ended Friday's session at $49.80, up 1.8 percent, while Brent futures were up 68 cents, or 1.3 percent, at $52.14 per barrel.
In assessing Thursday's dramatic decline, Hans van Cleef, senior energy economist at ABN Amro, said, "The problem is that investors look at impact today, while OPEC focuses on reaching stability in the coming 6-9 months, so the long squeeze yesterday was overdone a bit."
Looking ahead, Helima Croft, global head of commodity strategy at RBC Capital Markets, told CNBC that the extension speaks to the priorities of Saudi Arabia, which is focused on the Aramco IPO, and Russia, where president Vladimir Putin wants to keep the citizenry happy heading into next March's national election; she predicts a price floor in the $50s for the last half of this year, with WTI averaging $61.
George Fink, CEO of Bonterra Energy, is even more optimistic: "We have a fair shot by the end of the year, or maybe within the first or second quarter of 2018, [to see oil] probably ranging between $50 and $65," he told BNN.
Fink justified his prediction by citing enough demand to offset sluggish demand growth in China: "If you look at India, their middle class is just developing; they're still not a developed nation, nor are a lot of countries in Asia and in Africa.
"That demand is just going to continue growing, year after year."
Of course, the on-going thorn in OPEC's side - U.S. shale - is the main concern for most experts, and the prospect of continued rampant production from that as well as other countries prompted Deutsche Bank to predict that "Output controls will eventually be extended at least until the end of 2018, and more likely than not into 2019 ... at this pace, it will not be until at least the end of 2018, or indeed, 2019, when surplus inventories can be eliminated."
What if the effect of the OPEC extension leans more toward the Deutsche Bank prediction than those expressed by the bulls?
Alexander Novak, energy minister for Russia, answered that question indirectly in Vienna by telling CNBC, "You know, we have the capability to react to any situation that might arise on the market, and to this end we have a technical committee working on this every month."
In the wake of OPEC's May 25 extension announcement, Alan Bannister, regional director of oil content at S&P Global Platts, opined that the depletion of conventional wells combined with reduced exploration will "sow the seeds for a potential super bull run" that could be "well in excess" of $80.
