Crude oil traded near US$31 a barrel after Saudi Arabia and Venezuela met to discuss cooperating to stabilize the market and US data signaled investors are split on the direction for prices. Prices of crude futures rose a much as 1.2 percent in New York, trimming last week’s 8.1 percent drop.
Saudi Arabian Oil Minister Ali al-Naimi met with his Venezuelan counterpart on Sunday in Riyadh, the Middle East nation’s petroleum ministry said in a statement, without elaborating on steps required to shore up the market.
Speculators’ short positions on crude oil were near a record while longs were at the highest since June last year, lifting total wagers to unprecedented levels, data from the US Commodity Futures Trading Commission show.
Photo: Reuters
“There are very little signs of abatement on the supply side,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by telephone. “West Texas is likely to trade between US$30 and US$34. We could get a push outside of this, but I suspect that’s going to be a central range for months to come.”
Crude oil price is still down about 16 percent this year amid concerns about Iran’s effort to boost exports after the removal of sanctions and brimming US crude stockpiles. Prices will remain low for as long as 10 years as Chinese economic growth slows and the US shale industry acts as a cap on any rally, according to Ian Taylor, the chief executive officer of Vitol Group BV, the world’s largest independent oil trader.
“It’s hard to see a dramatic price increase,” Taylor told Bloomberg in an interview, saying prices were likely to bounce around a band with a mid-point of US$50 a barrel for the next decade.
“We really do imagine a band, and that band would probably naturally see a US$40 to US$60 type of band,” he said. “I can see that band lasting for five to 10 years. I think it’s fundamentally different.”
West Texas Intermediate for March delivery gained as much as US$0.37 to US$31.26 a barrel on the New York Mercantile Exchange and was at US$31.16 at 2:30pm Hong Kong time yesterday. The contract fell US$0.83 to US$30.89 on Friday. Total volume traded was about 18 percent above the 100-day average.
Brent for April settlement was at US$34.37 a barrel on the London-based ICE Futures Europe exchange, up US$0.31. The contract slid 2 percent last week. The European benchmark crude was at a premium of US$1.31 to WTI for April.
Venezuela’s Oil Minister Eulogio Del Pino met with al-Naimi after visiting Russia, Iran, Qatar and Oman on a tour to drum up support for a coordinated approach to address the slide in prices.
Six members of OPEC and two non-OPEC producers would be open to attending an extraordinary meeting if one is called, the South American country said last week.
For the foreseeable future, Taylor doubts the oil market would ever see the triple-digit prices that fattened the sovereign wealth funds of Middle East countries and propelled the valuations of companies such as Exxon Mobil Corp and BP PLC.
“You have to believe that there is a possibility that you will not necessarily go back above US$100, you know, ever,” he said.
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