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25/04/2016 05:30 AST
Oil prices are likely to witness limited upside even as traders look at the first quarter earnings of energy companies for hints.
On Friday, Brent crude ended more than 1 per cent higher at $45.11 (Dh165) per barrel, extending gains for a third consecutive week. Brent gained more than 9 per cent in the past week.
“We have big producers like Saudi Arabia, Russia and Iran talking about increasing production rather than rationalising it. That kind of talk act[s] as barrier to prices rallying significantly more from where we are now,” Edward Bell, commodities analyst with Emirates NBD, told Gulf News.
Saudi Arabia, the world’s largest oil exporter, could increase output by more than 1 million of barrels per day, or about 10 per cent, to 11.5 million if there was demand for it, Saudi Arabia’s Deputy Crown Prince Mohammad Bin Salman Bin Abdul Aziz said on April 14. It could increase further to 12.5 million in six to nine months, he added.
Iran, which increased its oil production by 1 mbpd since January, has also indicated of pumping as much as crude to regain the lost market share.
Ranged
“Brent crude is expected to be in the range of $35-45 per barrel and most of the time would be spend in the upper end of the range between $40-45. There would be a lot of pressure in the market if crude manages to get around $50,” Bell said. Brent prices have recovered 66 per cent from its 12-year low struck in January.
Going ahead, traders will also eye the first quarter results from energy companies.
“Traders will be paying much attention to their cost-cutting equation and by how much are they going to miss the forecast. This will also be the key driver for oil prices,” said Naeem Aslam, chief market analyst with AVA Trade.
Analysts expect BP will announce its first loss since the Mexico gulf oil spill, and also weaker set of numbers from Exxon Mobil and Shell. Oil companies have slashed spending budgets by more than 25 per cent since 2014, scrapped dozens of multibillion dollar projects, slashed tens of thousands of jobs and reduced their costs.
Gulfnews
Ticker | Price | Volume |
---|---|---|
SABIC | 114.77 | 5,915,941 |
(In US Dollar) | Change | Change(%) | |
---|---|---|---|
Brent | 68.12 | -2.02 | -2.88 |
WTI | 63.51 | 0.5 | 0.79 |
OPEC Basket | 64.98 | -1.5 | -2.26 |
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