OPEC has lost control but prices could hit a bottom - CNBC Oil Survey
OPEC has lost its grip on the oil market, but crude prices will likely set a bottom in the low USD 40s per barrel, according to the latest CNBC Oil Survey. Sixty percent of participants agree that OPEC has lost control of the oil market, and the same percent also expect the cartel to continue its efforts to “jawbone” or talk up prices. Just over half, or 53 percent of the participants in CNBC’s latest survey, said that the bottom for oil prices is likely to be in the low USD 40s per barrel. However, 70 percent would not rule out a further drop into the USD 30s. Forty-six percent see it holding in the high $30s if it does go below USD 40 per barrel.
Forty-seven percent of the 15 oil market experts say there is more downside risk, but 40 percent say there should not be. Oil prices are expected to end the year between USD 40 and USD 49 per barrel, according to 47 percent, while 33 percent see prices in the USD 50 to USD 59 per barrel range. Oil prices rose for an eighth day Monday, in the longest winning streak in more than five years. West Texas Intermediate crude futures settled up 2.2 percent at a one-month high, USD 47.07 per barrel.
WTI hit a recent low of USD 42.05 per barrel on June 21, a level it had been near in November. The low in August 2016 was USD 39.19 per barrel. Oil rose as U.S. government data on drilling activity for new oil production in the United States fell for the first time since January, dropping by two rigs. Monthly government data also showed crude output fell in April for the first time this year.
US Energy Information Administration figures, released, showed that US output fell by 24,000 barrels per day on a monthly basis, a bullish signal for the market. Oversupply was cited by 93 percent in the survey, as the biggest factor influencing prices right now, and 80 percent expect it to be the biggest factor for the remainder of the year. Just 7 percent see demand as the biggest issue. Seven percent see geopolitical threats as a bigger factor affecting prices, and 6 percent expect OPEC will be the greatest influence in the second half of the year. Forty-seven percent believe demand is stronger but 40 percent believe it is flat. Thirteen percent say demand is trending weaker.
Commodities analyst Dennis Gartman, publisher of the Gartman Letter, says that the world must understand that the hydraulic fracturing and horizontal drilling technologies used by U.S. drillers have not even begun to be used in other parts of the world.
He wrote in comments supplied with survey results “It WILL, the effects of which are obviously long term very, very bearish.” Gartman said U.S. technology will expand to Russia, Mexico, China the Middle East and Africa.
Source : CNBC