Oil price rally ends as banks slash forecast
A lot of developments happened last week that impacted on the future of crude oil business globally, first among them was that an array of investment banks have slashed their expectations for oil prices yet again. A Wall Street Journal survey of 15 investment banks revealed the third consecutive month of declining expectations for oil prices.
An average of those forecasts sees Brent averaging $53 per barrel this year, down $2 per barrel from the June survey. They also forecast Brent at $55 per barrel in 2018, also down $2 from June. “In the very near term, we are cautious about prices, especially in September and October, when the seasonality of crude and product demand turns bearish,” Michael Wittner, chief oil analyst at Société Générale, wrote in a report.
Also the Oil prices stall on downbeat data. West Texas Intermediate WTI stalled out last week on several pieces of bearish data. U.S. oil production ticked up to 9.43 mb/d in the most recent EIA release, the highest production level in two years just as OPEC’s production rose again in July to its highest point in 2017.
The progress made by the Nigerian government in terms of peace talk in Niger Delta as she has agreed to legalise small refineries in the region. Has no doubt impacted on the stability of oil supply
The Niger Delta is rife with illegal refining, but the government has agreed to grant small modular refineries in an effort to forge a stronger peace with militants in the region. The progress in peace talks bodes well for the country in its effort to bring more oil production back online. Nigeria is targeting 2 million barrels per day this month, up sharply from earlier this year.
According to oil price .com, Andy Hall, a notable oil trader, has decided to shut down his hedge fund because of steep losses it has incurred on oil trades. Astenbeck Master Commodities Fund II lost 30 percent of its value through June. The hedge fund bet that oil prices would climb this year on the back of the OPEC cuts. But the rebound of production from U.S. shale, as well as the return of Libyan and Nigerian production, has prevented a rally from occurring. Bloomberg says at least 10 asset managers trading in the energy and natural resources space have shut down funds since 2012.
Trump signs Russia sanctions bill. The U.S. President signed new sanctions on Russia, Iran and North Korea into law this week, but only begrudgingly. The veto-proof legislation from Congress forced his hand, and the new law will heighten tensions with Russia. It slaps new sanctions on the involvement of oil companies in Russian energy projects, with the Nord Stream 2 pipeline a key project that has come under scrutiny.
Olusola Bello with agency report