Americas News
Banks Disagree About Crude's Future as Oil Trades Flat on Monday
Once again, crude traded flat on Monday with West Texas Intermediate settling down 14 cents to $57.16 per barrel and Brent rising 18 cents to $63.41 - and, once again, the experts including two banks offered differing opinions of where oil is heading next.
First, though, came explanations for Monday's tepid showing, with Bob Yawger, director futures division at Mizuho Securities USA, pointing out that "The only thing that's holding the market here at these levels is the Forties problem" - meaning the Forties Pipeline System in the North Sea that is currently shut down and undergoing repairs for hairline cracks.
He added, "The potential is there for people to start bailing on the loaded-up speculative position; I would tend to think there will be a slow unwinding of these positions in anticipation" of the line restarting soon.
As for the near future, Bloomberg notes that Goldman Sachs Group Inc. is extremely bullish about what lies ahead based on the Organization of the Petroleum Exporting Countries (OPEC) extending its crude cutback deal; too, JPMorgan Chase & Co. said "solid fundamentals and tightening balances," as well as OPEC's willingness to balance markets, are reasons for its positive outlook.
But on he bearish side are Citigroup Inc. and Barclays Plc, both of whom believe the demand for crude will deplete and a surge in U.S. shale production could spook the market.
Also expressing bearish sentiments was David Kelly, chief global strategist for JPMorgan Asset Management, told Bloomberg television, "We have booming global growth" and remarked about "just how reactive shale crude oil is to prices; so I've got to believe that as we settle in close to $60 for WTI and over $60 on Brent, we're going to see a ramp up in U.S. production that is going to stop the inventories from coming down."
Meanwhile, Russia, whose entire government's budget is based on oil revenues, on Monday published a central bank report stating that it was forecasting 2 percent growth next year, based on oil averaging out at $55 in 2018.
On Friday, geopolitical tensions and not any confidence in OPEC were said to be the reason why over 32,000 option contracts giving traders the right to buy Brent at $80 for June 2018 onward were traded last week.
