Ashley Kelty, oil & gas research analyst at Cantor Fitzgerald Europe, commented:
“Oil prices look to remain under pressure, as fears of global oversupply have returned with a vengeance. The prospect of escalations in the US-Sino trade appear to have receded slightly after the bullish reports of the call between Chinese Premier Xi Jinping and President Trump.
“However, whether this translates into a deal at the summit in Argentina later this month remains to be seen. It is clear that the dispute and tariffs are likely to cool the two largest economies in the world, with a concomitant negative impact on the rest of the global economy. This will continue to place downward pressure on crude prices, as the increased output from the US and OPEC+ increases the likelihood of near term oversupply. This concern is heightened with both WTI and Brent moving into a contango position.
“Downward pressure on oil is also visible in the physical market, where Saudi Arabia is expected to cut December crude prices amid higher supply and a glut in refined products that has eroded (already thin) refinery margins. We could see Brent retreating below $70 in the near term, although we would anticipate that it will not dip much below US$65, as OPEC production will struggle to increase much further due to the lack of physical spare capacity, and the sanction in Iran and plummeting output from Venezuela continue to take further physical product from the market. The only certainty is further near term volatility in global markets.”
Read the article online at: https://www.oilfieldtechnology.com/special-reports/05112018/cantor-fitzgerald-brent-unlikely-to-dip-below-us65-despite-oversupply-fears/