The Wall Street Journal suggests that speculators are buying crude, while fundamental traders expect a pull back once some temporary bullish factors subside (http://www.wsj.com/articles/oil-prices-gain-on-output-declines-1461316877):
Here is Goldman Sach’s quoted in the article:
“The sentiment in commodity markets has clearly shifted towards being more bullish,” said Jeffrey Currie of Goldman Sachs in a note to clients. But “we believe that it is not yet driven by a sustainable shift in fundamentals.”
Recent disruptions in Kuwait, Nigeria, Iraq and Venezuela are likely temporary:
“While these adjustments deal with near-term surpluses through oil supply disruptions…they do not address the longer-term supply problems of excess capacity,” Mr. Currie said. “We believe the current decline in U.S. oil production is still insufficient to offset low-cost supply growth such as Iran, particularly should disruptions in Iraq, Nigeria and Venezuela reverse.”
I have been suggesting a trading range of around $35 to $43, which agrees with the above assessment… Read the whole article which includes the bullish case…
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