Despite Strong Week for Crude, BP Says Oil Will Remain Range Bound at $50-$60/bbl

Kazakhstan has declared its support for an OPEC cutback extension. File Image / Pixabay

With Thursday's strong market showing contributing to a week of solid growth for crude, analysts are trying to determine what lies immediately ahead for the commodity - and if BP's opinion carries any weight, what lies ahead is prices stuck in a range of $50-$60.

Bob Dudley, chief executive for BP, said the range will hold as supply and demand eventually balance due to the influence of the Organization of the Petroleum Exporting Countries (OPEC) production cutback initiative: "It was always going to take quite a while for stocks to come down, but for the OPEC and non-OPEC producer agreement, from everything we see, there is broadly compliance in place and stock levels are coming down.

"We don't expect a spike up in prices nor do we expect a big drop in prices; so we're all trying to make our way in this world of between $50 and $60, and I would expect that to continue."

Dave Wilson, co-host of Bloomberg Radio's Taking Stock, and Mike McGlone, commodity strategist for Bloomberg Intelligence, discussed how crude might revisit $60 in the near future, with the latter stating, "the number one paradigm shift this year is the declining dollar" and that this is a game changer for commodities.

McGlone went on to say that crude is just starting to catch up with other commodities in terms of price growth.

It's questionable whether faith in a weak dollar and a cartel that has yet to bring about market rebalance despite numerous promises will continue to sustain crude's new-found price strength; but OPEC at least continues to garner media attention, on Thursday due to Nursultan Nazarbayev, president of Kazakhstan, declaring his support for a cutback extension.

He told reporters, "The price of $52-$55 [per barrel of Brent] satisfies everyone; if this position keeps working, we will maintain our solidarity in order to support the price."

But as far as Helima Croft, chief commodities strategist for RBC Capital Markets is concerned, that support is worthless: earlier this week she remarked that while the key objective of OPEC is to push prices above $60, including countries such as Kazakhstan in the cutback deal is "a lost cause" because "they sign up and keep pumping."