In a report despatched to Rigzone by the Skandinaviska Enskilda Banken AB (SEB) group on Tuesday morning, Bjarne Schieldrop, the chief commodities analyst on the firm, stated Brent crude was “ripe for a correction decrease”.
“Brent closed down 0.8 p.c yesterday at $80.15 per barrel and traded as little as $79.42 per barrel intraday,” Schieldrop stated within the report.
“Brent is buying and selling down one other 0.4 p.c this morning to $79.9 per barrel. It’s onerous to trace and assign precisely … from Donald Trump’s bulletins yesterday, which was impacting crude oil costs in several methods,” Schieldrop added.
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“However crude oil was already ripe for a correction decrease because it lately went into strongly overbought territory. So, Brent would in all probability have offered off a bit anyhow, even with none bulletins from Trump,” he went on to state.
In a separate report despatched to Rigzone by the SEB group on Monday, Schieldrop highlighted that Brent crude “gained one other 1.3 p.c final week with an in depth of $80.79 per barrel” and famous that the commodity “reached a excessive of $82.63 per barrel final Wednesday”.
In that report, Schieldrop stated the brand new sanctions on Russia have pushed crude oil greater over the previous weeks however added that “speculators have additionally helped to drive flat costs greater, in addition to driving the front-end of the crude curves into steeper backwardation”.
“Speculators sometimes purchase the front-end of the crude curves and thus are likely to bend the ahead curves into steeper backwardation,” he famous.
“So, curve shapes should not totally goal measures of tightness. Web-long speculative positions (Brent +WTI) rose 52.4 million barrels over the week to final Tuesday. In complete they’re up 415 million barrels to 577 million barrels versus the low level within the autumn of 162 million barrels in early September,” he stated.
Schieldrop said in that report that Brent crude “has now technically pulled again from overbought with RSI at 65.2 and again under the 70-line”.
“However this doesn’t appear to be only a speculatively pushed frothy flash within the pan,” the analyst stated in that report.
“Don’t forget that time-spreads have been tightening since early December and flat costs have risen greater together with them,” he added.
“Even when we discover it probably that Brent crude will make a pullback under the 80-line, it doesn’t imply that that is the tip of the positive factors,” he continued.
A analysis be aware despatched to Rigzone by the JPM Commodities Analysis group on Saturday confirmed that J.P. Morgan anticipated the Brent crude worth to common $74 per barrel within the first quarter of 2025 and $73 per barrel general this yr.
A separate analysis be aware despatched to Rigzone by the JPM Commodities Analysis group on Monday said that the estimated worth of open curiosity throughout power markets elevated by two p.c week on week to $684 billion.
“The rise was predominantly pushed by pure fuel and petroleum product markets, whereas crude oil noticed a decline of -$2.6 billion WOW, as the overall outflows throughout all dealer sorts had been solely partially offset by greater costs,” the be aware stated.
“Petroleum merchandise skilled a wholesome $5 billion WOW of inflows throughout all dealer sorts, which was additional supported by optimistic worth actions throughout the curves. Our oil strategists highlighted strong demand by January up to now (partially pushed by colder than regular climate) and a decline within the oil rig rely in the US,” it added.
“The estimated worth of open curiosity in pure fuel markets elevated by ~$10 billion WOW because the inflows of $5 billion WOW had been additional complemented by stronger worth actions throughout European benchmarks because the continent tries to draw LNG cargoes to normalize its storage trajectory, whereas climate and new LNG amenities additionally put stress on U.S. fuel storage ranges,” the be aware continued.
In accordance with its January quick time period power outlook (STEO), the U.S. Power Data Administration (EIA) expects the Brent spot worth to common $76.34 per barrel within the first quarter of this yr and $74.31 per barrel general in 2025.
To contact the creator, e mail andreas.exarheas@rigzone.com
