OilMarket Outlook
Crude oil prices fell early last week on concern about plans by Libya to export more than 1.2 million barrels per day, and the prospect of sanctions on Iran being lifted if nuclear talks succeed. Prices were also pressured by a new report showing US oil inventories at record highs.
However, prices rallied strongly on Friday amid an upturn in commodities, as the dollar fell on expectations that US interest rates would not rise anytime soon.
West Texas Intermediate (WTI) crude in the past week dropped by 88 cents from a week earlier to close at $43.96 per barrel. Brent fell 24 cents to $54.43 and Dubai crude closed down at $52 per barrel.
Thaioil forecasts WTI will move this week within a range of $42 and $47 and Brent between $52 and $57. Talks between world powers and Iran, Greek debt talks, US dollar movements will be among developments to watch:
Iran and six major world powers will resume talks on Wednesday amid growing optimism that a framework agreement can be reached by the March 31 deadline. The negotiations aim to limit Iran’s nuclear capabilities as a tradeoff for the easing of sanctions, which could lead to oil exports of 1 million bpd. Iranian President Hassan Rouhani said on Saturday that while some differences remain, there is “nothing that cannot be resolved”.
Greek Premier Alexis Tsipras visits Berlin today for talks with German Chancellor Angela Merkel. Athens needs to have its new reform plans to secure 7.2 billion euros of bailout funds to avert a default, which could force Greece to exit the euro.
Talks continue in Libya to resolve the conflict between the recognised government based in the east and militias that control the capital Tripoli. Amid the turmoil, the country is trying to step up oil exports from eastern ports to earn revenue.
US crude stockpiles have reached an 80-year high with no sign of a slowdown, raising concerns of even more oil flooding the market. Blue Knight Energy Partners, a storage facility provider at the Cushing, Oklahoma hub, has predicted that all storage will be full by April or mid-May.
Demand for crude is projected to soften in the second quarter due to maintenance turnarounds by Asian refineries between now and May.
The dollar is being watched closely now that the Federal Reserve has signalled that a June rate increase is highly unlikely as it still sees some weaknesses in the economy. Investors have started shifting money to equities and commodities as a result. The strong dollar weakens crude demand by making it more costly for holders of other currencies.
Economic indicators to be monitored include the final US fourth-quarter GDP reading, consumer prices, consumer sentiment and manufacturing and services PMI reports, as well as Chinese and euro zone manufacturing PMI.