But one analyst thinks prices may recover later this year: File Image/Pixabay
The focus of crude traders on Thursday was on the near future: specifically, a meeting of the U.S. Federal Reserve that may or may not culminate in the central bank continuing to cut interest rates, thus either assuaging or aggravating fears of an impending recession.
The waiting game was more bad news for crude prices, although mildly so: Brent settled down 38 cents at $59.92 per barrel, while West Texas Intermediate ended the session 33 cents lower at $55.35.
Despite arguments in some analytical circles that the fears of a recession - and attendant drop in demand for oil - are overblown, crude traders over the summer have reacted to the slightest rumour, hope, and speculation that could barely pass for meaningful insight into the world economy; and on Thursday it was pointed out that focus on the Federal Reserve meeting may too be a case of over-inflated expectations.
Alan Custis, Lazard Asset Management
We think the oil price is well supported at circa $60
Jim Ritterbusch, president of Ritterbusch and Associates, said, "While we are not expecting any dramatic developments capable of swinging the equities either way by more than 1 percent or so, we feel that current bullish momentum in the oil market could allow the energy complex to absorb bearish guidance much easier than any negative [Federal Reserve] guidance that may be forthcoming."
Given the bearish doldrums that have affected analytical and trading circles over the past few months, it was therefore a surprise when Alan Custis, managing director and head of U.K. equities at Lazard Asset Management, told CNBC television on Thursday that the prospect of oil prices look "pretty good" for the rest of the year.
He justified his stance by predicting there will be a "face saving deal" toward the end of the year between the U.S. and China, thus ending the much-hyped trade war and easing tensions all around: "We think the oil price is well supported at circa $60;.....OPEC, with Russia, have got a degree of control back on oil price, and I think that shale oil has proven to be not as cheap as people thought it was going to be initially."
As an adjunct to Custis's comments and bearish sentiment notwithstanding, it's worth noting that the price of Brent is up by about 13 percent this year, supported by supply cuts led by the Organization of the Petroleum Exporting Countries, and export cuts affecting Iran and Venezuela.