On Thursday, Greece made strict concessions on tax reforms in a €13 billion revised proposal which could allow the beleaguered Mediterranean state to remain in the euro.
Advertisement
But it cautions that: “The market’s ability to absorb that oversupply is unlikely to last”.
WTI settled on Friday at above $52, recovering from Tuesday’s slump, helped by the recovery in China’s stock market and optimism that Greece may have a bailout deal by the weekend.
It was a plunge that hinted that maybe the oil industry hasn’t fixed all of its problems just yet.
Meidan argues the ‘stock market crash will have limited impact on the domestic economy and oil-demand growth.’.
China is the largest Crude Oil importer in the world, and has massive influence over prices.
The third factor affecting oil was Iran. Over the last month front-month prices have dropped 17 percent breaking out of the very narrow range that had prevailed since the middle of April.
This boils down to the ongoing war between the Saudi-led Organization of Petroleum Exporting Countries (OPEC) and United States drillers, with the ex- flooding the market with huge quantities of oil in an attempt to drive down prices.
London-traded Brent crude was up 5 cents at $58.66 barrel by 12:33 p.m. EDT (633 GMT), after trading between $59.66 and $57,86.
Crude prices have come down from as high as $115 a year ago to below $60 but the IEA said: “The bottom of the market may still be ahead”. In 2016, Commerzbank expects Brent to average $73 a barrel, down from its prior forecast of $78 a barrel.
The market could become more off-balance, putting downward pressure on oil prices and a rebound is not expected anytime soon.
The resilience of USA shale oil production has impressed many traders. This is definitely not the case over the medium term.
Access Investor Kit for Baker Hughes, Inc.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell 0.54% to 96.15.
It has been clear for some time that the downturn in drilling was bottoming out but the increase in active rigs was a surprise. Back in January, we predicted such a deal would be struck this year; while no one can say precisely when it will be concluded, the expectation is in the coming several weeks, and possibly the next few days. Over the last five days of trading, brent futures declined by roughly 2.70%. OPEC’s oil inventory also hit a record in May of 2.8 billion barrels of oil.
The agency noted that oil demand growth would ease throughout the rest of 2015 and in 2016, after reaching its peak in the first quarter at 1.8mb/d.
Advertisement
“Data on the demand side out of China, such as crude oil imports, has been weak lately and has contributed to oversupply fears”, says Carsten Menke, commodities analyst at Julius Baer.
