Banks from Citigroup Inc.to Bank of America Merrill Lynch see a simpler explanation for the rebound: the global oil oversupply is finally dissipating.
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Coming just days after oil fell to a three-month low near $40 a barrel, OPEC’s August 8 announcement that it would hold “informal talks” in Algiers fostered a rebound in prices, even though most analysts doubt the group will agree on any production limits.
Away from the crude market, precious metals endured another volatile session after US Federal Reserve Chair Janet Yellen said the case for an American interest rate rise had “strengthened in recent months”.
“Iran has not caused any disturbance to the oil market, instability in the market appeared when Iran’s oil production barely reached 2.7 million barrels and the exports were less than a million barrels a day”, he said.
“There was some view that there was an acceptance within OPEC of $30, more or less as a floor; that seems to have moved to $40”, Bob Michele, chief investment officer at JPMorgan Chase & Co., said in a Bloomberg television interview.
“Regaining our market share is a nationwide demand”, he stressed.
Producers from Opec will meet on the sidelines of an energy-policy group.
“I suspect that there’s not going to be much happening” in Algiers, Morse said.
The front-month Brent contract on the ICE Futures Europe exchange was about $1.80 barrel cheaper than the sixth month, compared with a spread of $3.08 barrel on July 29. However, in case the major oil kingpins had a change of mind and the central bank still couldn’t foresee a stable United States economy, the Canadian dollar will rebound eventually.
Oil prices fell Friday as OPEC’s key producers cast doubt on the need to cut output, denting hopes of a deal to tackle a global supply glut. Pay attention to the U.S. dollar, if it starts to strengthen that could turn this market back around, but as long as it remains relatively soft, I believe that we will continue to see quite a bit of bullish pressure in both of the petroleum markets as they tend to be very sensitive to the value of the greenback. North American “earnings per barrel processed’ has dropped in recent years as WTI has aligned itself closer to global benchmarks with the building out of pipeline infrastructure (to alleviate Cushing), as well as the lifting of the US crude export ban”.
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Oil prices moved modestly lower in early Friday trading as investors balanced USA economic data against bets on the next move from the Federal Reserve.
