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19 May 2015
Risks for oil prices tilted to the downside – KBC
FXStreet (Barcelona) - The KBC Bank Research Team explains that the period of oil prices remaining below $60/bbl may last longer than previously expected.
Key Quotes
“Today in early trading, the oil price continues to slide and at the moment of writing of this note is seen at 65.6 USD/bbl. The market has however lately missed any stronger impulses that would either support or undermine the price. For example, yesterday’s sharp reversion of early gains suggests that room for prospective further gains of Brent is rather limited. This has also been suggested by the latest ICE Commitment of Traders report.”
“Although the net speculative position in Brent futures declined, the report also showed that number of traders betting on the price decline fell quite sharply over the past two weeks. This in our view suggests that the risks for oil price are tilted rather to the downside.”
“As we already pointed out before, we perceive the recent oil rally as a bit premature. Moreover, any period of higher oil prices (such as the current one) alleviates the pressure on producers (for example in the U.S.) which suggests that the period of lower oil prices (below 60 USD/bbl) may in fact last longer than we previously thought.”
Key Quotes
“Today in early trading, the oil price continues to slide and at the moment of writing of this note is seen at 65.6 USD/bbl. The market has however lately missed any stronger impulses that would either support or undermine the price. For example, yesterday’s sharp reversion of early gains suggests that room for prospective further gains of Brent is rather limited. This has also been suggested by the latest ICE Commitment of Traders report.”
“Although the net speculative position in Brent futures declined, the report also showed that number of traders betting on the price decline fell quite sharply over the past two weeks. This in our view suggests that the risks for oil price are tilted rather to the downside.”
“As we already pointed out before, we perceive the recent oil rally as a bit premature. Moreover, any period of higher oil prices (such as the current one) alleviates the pressure on producers (for example in the U.S.) which suggests that the period of lower oil prices (below 60 USD/bbl) may in fact last longer than we previously thought.”