Oil under $48-a-barrel, but analyst sees a bottom
Oil prices are trading sideways on Monday after last week’s fall due to a supply overhang as well as a broadly strong dollar.
Brent crude LCOU5, -0.16% , the global oil benchmark, rose 5 cents to $54.50 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures CLU5, -0.44% were trading down 14 cents at $47.86 a barrel.
“I think oil should find strong support here and not go down further,” said Daniel Ang, Singapore-based investment analyst at Phillip Futures.
He said oil prices are likely to continue to follow the U.S dollar, which has largely gained on expectations that the U.S Federal Reserve will raise interest rates this year.
There are other headwinds to oil prices with crude demand expected to decline into the fall as well as higher supplies returning from Canada, a Morgan Stanley research report said.
Macro funds have also been buying only limited quantities because of deteriorating risk appetite.
West Texas Intermediate futures are facing more uncertainty with the U.S export ban in place, the Morgan Stanley report added.
Market dynamics are also changing with members of the Organisation of Oil Exporting Countries looking to diversify their revenues in a low crude oil price environment, said an ANZ report.
Saudi Basic Industries Corp. is looking at investing in US shale and some other options in China using coal to convert to chemical products, it added.
Nymex reformulated gasoline blendstock for August — the benchmark gasoline contract — fell 64 points to $1.8218 a gallon.
ICE gasoil for August changed hands at $497.75 a metric ton, down $1.25 from the previous day’s settlement.
Source: MarketWatch – Oil under $48-a-barrel, but analyst sees a bottom
