Oil falls on rising US stockpiles, but $70 reachable if support maintained – analyst says
Oil prices slipped slightly on Wednesday after reports of US crude stockpiles outstripped OPEC supply cuts, but $70 levels are attainable if $64 support levels are maintained, analyst says.
Oil prices slide to session lows on Wednesday, extending earlier losses, after news of US crude stockpiles outweighing OPEC-led production cuts were announced in a recent report by the American Petroleum Institute.
International Brent crude futures traded down 48 cents to $65.38 a barrel on Wednesday afternoon, falling as low as $65.22 earlier in the trading session. Meanwhile, West Texas Intermediate (WTI) futures slid more than 1.5% to 55.62 a barrel.
’Crude oil futures continue to demonstrate whippy trades as markets balance between OPEC-led cuts and the effects of rising U.S. production levels,’ said Benjamin Lu, commodities analyst at Singapore-based brokerage firm Phillip Futures.
Despite the fall it is possible that oil prices could hit $70a barrel, so long as Brent crude can find support at $64.50 levels, according to contributor at Forbes and independent oil analyst Gurav Sharma.
In the run up to the next OPEC meeting in mid-April, Sharma said that he expects some ‘to and fro’ on prices, but not doesn’t think that there will be a convincing move in either direction.
China slowdown ‘overplayed’
Signs of China’s slowing economy are growing and ongoing trade talks with the US have applied downward pressure on oil prices in recent months and a lack of detail over US-China trade talks has led to investors becoming increasingly skittish.
But despite concerns over China’s economy, Sharma argues that the slowdown is ‘overplayed’.
‘In terms of the more wholistic demand, I think the key demand centre for a lot of oil exporters is India,’ he said.
Sharma expects a trade deal to be agreed by the third or fourth quarter of the year, which he says ‘could provide a tailwind’ to the oil market that could help push Brent nearer to $70 levels.
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