“No balance is seen yet in supply-demand dynamics. Also, temperate winter in North America and Europe due to El Nino is hitting demand further worsening the balance”, says Chris Main, Commodities Strategy Analyst, Citi
Chris Main, Commodities Strategy Analyst, Citi, says crude price may not have hit the bottom yet and weakness is likely to continue. “No balance is seen yet in supply-demand dynamics. Also, temperate winter in North America and Europe due to El Nino is hitting demand further worsening the balance”, Chris says. Chris believes it is unlikely that Iran can reach their targeted 1 mn bbl/day over the next one year. Market estimates peg the likely production from Iran at 300,000-500,000 bbl/day. Although Chris does expect price to dip below USD 30/bbl, he believes it may not sustain at that level for long. “It is conceivable that WTI Crude could head below USD 30/bbl but it may not stay there for longer. Factors like currency depreciation, high decommissioning costs which offset the initial cash cost could take oil through the USD 30/bbl-mark”, he says, adding the first quarter of next year could be the sloppiest period for crude as refinery maintenances start in Europe and North America. Chris also expects drop in oil to drag down oil-linked LNG cargo prices. He see the global gas prices heading lower.
Chris Main, Commodities Strategy Analyst, Citi, says crude price may not have hit the bottom yet and weakness is likely to continue. “No balance is seen yet in supply-demand dynamics. Also, temperate winter in North America and Europe due to El Nino is hitting demand further worsening the balance”, Chris says. Chris believes it is unlikely that Iran can reach their targeted 1 mn bbl/day over the next one year. Market estimates peg the likely production from Iran at 300,000-500,000 bbl/day. Although Chris does expect price to dip below USD 30/bbl, he believes it may not sustain at that level for long. “It is conceivable that WTI Crude could head below USD 30/bbl but it may not stay there for longer. Factors like currency depreciation, high decommissioning costs which offset the initial cash cost could take oil through the USD 30/bbl-mark”, he says, adding the first quarter of next year could be the sloppiest period for crude as refinery maintenances start in Europe and North America. Chris also expects drop in oil to drag down oil-linked LNG cargo prices. He see the global gas prices heading lower.
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