Oil near $70 as US shale surge looms over bullish banks
Published : Feb 2, 2018 - 21:44
Updated : Feb 2, 2018 - 21:45
Brent crude traded near $70 a barrel as the specter of expanding U.S. supply was weighed against Wall Street banks’ growing faith in a price rally.
The benchmark grade is on course to end the week lower, after being whipsawed by concern about rising American production and optimism over rosy outlooks painted by forecasters including Goldman Sachs Group Inc.
Brent has held at these levels since mid-January, after being driven higher by shrinking U.S. stockpiles and a weaker dollar earlier in the year. Goldman Sachs hiked its price forecast Thursday, saying the market is now likely balanced and strong global growth will buoy demand in emerging economies. Morgan Stanley and JPMorgan Chase & Co. also raised their outlook last month. Higher prices are an incentive for American drillers to pump more.
“There’s no doubt shale players will respond to higher prices,” says Jan Edelmann, commodity analyst at HSH Nordbank AG. “Given the momentum of the world economy though, the risks are skewed to the upside for oil demand.”
Brent for April settlement was at $69.38 a barrel as of 12:27 p.m. on the London-based ICE Futures Europe exchange, down 27 cents. The contract rose 0.8 percent to $69.65 a barrel on Thursday. Total volume traded was about 31 percent below the 100-day average.
West Texas Intermediate for March delivery fell 0.2 percent to $65.70 a barrel on the New York Mercantile Exchange, and is down about 0.7 percent this week. The April contract traded at a discount of $3.95 to Brent for the same month. (Bloomberg)
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