Recovery on the Chinese stock market and heated exchanges on the prospects of an Iranian nuclear deal sent crude oil prices soaring early Thursday. Oil prices plunged by more than 50 per cent in the last few months.
Advertisement
Still, with domestic benchmark oil slated to average about $55 per barrel this year, the core spots of the Bakken, Eagle Ford, Niobrara and Permian basins remain economically viable to support development drilling, the EIA said.
Crude-oil futures posted marginal gains in Asian trade Thursday helped by some bargain hunting after oil prices fell to three-month lows earlier this week. “As long as gasoline is holding strong, it’s hard for crude oil to have another sell-off without some news from Iran“.
“It is important to emphasize that it will take some time for Iranian oil to hit the market, but certainly traders are willing to price that factor as the story develops further”, said Naeem Aslam, chief market analyst at AvaTrade.
United States output will advance 8.6% to 9.47 million bpd this year, the most since 1970, the Energy Information Administration said today in its monthly Short-Term Energy Outlook.
The collapse in China’s stock prices, combined with the prior week’s unexpected increase in the crude oil inventory and the uncertainty surrounding Greece and the European Union, has been enough to push the West Texas Intermediate (WTI) price down by almost $6 a barrel since last week.
Ang said the oil market is also watching ongoing top-level negotiations in Vienna between Western powers and Iran on Tehran’s nuclear ambitions, although indications are that both sides were set to miss yet another deadline Tuesday to nail down an agreement. A small but significant player, Libya couldput another million barrels of oil a day on the market in three months, he said. It’s an open secret in the industry that the 12-member oil cartel OPEC is pumping more oil than its official target of 30 million barrels per day; in fact, it has for the past year.
When prices fall by 20 per cent from their peak, this is commonly defined as a bear market. If that happens, the demand for oil that everyone has been presuming may also be put off for a little while. Last week, crude oil stocks saw the first build in nine weeks, though levels are still seen as excessively high (17 percent higher on an annual basis).
Advertisement
In its Tuesday report, the EIA forecast the average price for benchmark crude in Europe at $61 a barrel for 2015 and $67 in 2016.
