Commodity Update; Crude Oil – 23 December 2014
Oil price decline eases, benchmarks appear to find temporary bottom
After breaking below $60 and $55 per barrel last week both Brent crude and WTI crude now appear to be stabilising. This is as a short series of higher lows and higher highs now appears to have called a halt to a sell off which has seen both benchmarks shed nearly 50% during the second half of the year.
While it is possible that prices could fall further once into the new year, speculators appear to have grown weary of further bets against the commodity for the time being. This was highlighted by the muted market reaction to several statements made by the Saudi Arabian oil minister for OPEC this week.
Ali al-Naimi, oil minister for Saudi Arabia, said to the Middle Eastern Economic Survey that “it is not in any producer nations interests to cut production and therefore, prices are irrelevant, whether at $20, $40, $50 or $60”. The minister is also reported to have said that Saudi Arabia would even be willing to raise output further if new customers emerge.
If markets were nervous over the minister’s comments they didn’t show it, as both Brent and WTI crude continued their earlier advance; aided by stronger than expected growth figures emerging from the US.
Looking ahead, our expectations for oil prices moving into 2015 are largely neutral. On the one hand we do not anticipate a substantial fall below $50 per barrel will be sustainable over the medium term, while on the other hand; we also expect any substantial correction to the upside to prove difficult to sustain.
Brent/ WTI // Hourly Intervals
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