In Oil & Companies News 01/09/2017
Oil surged by more than three per cent on Friday with Brent benchmark prices climbing towards USD 53 per barrel. Support came from different directions including news about refinery outages, a slightly softer dollar and another slowdown in US drilling activity. However, the sharpness of Friday’s price up-move suggests that short-covering activity in the futures market was the key driver. Even if drilling activity stalls at today’s levels, US oil production is set to climb to new record highs next year, in part because of the ample backlog of drilled but uncompleted i.e. not yet operational wells. We maintain a neutral view and see prices trading sideways, spending more time in the high 40s than the low 50s. Short-term volatility remains fuelled by flip-flopping sentiment and the noise caused by supply news, the petronations’ deal compliance and geopolitics. Throughout summer a series of large US oil storage decreases had lent support to sentiment and prices. But US oil demand will seasonally soften over the coming weeks as the driving season wraps up, possibly bearing headwinds to oil prices.
Oil prices surged on Friday fuelled by short-covering activity in the futures market while fundamental news flow was sparse. We maintain a neutral view and see oil prices trading sideways as growing shale output and stagnant western world oil demand undermine the Middle East’s supply deal.
Source: CPI Financial
