Dubai: Amid the positive momentum, oil prices, which extended gains for a fourth consecutive week, may witness limited price upside till the outcome of the Vienna meet later in November, with a stronger dollar acting as a headwind.
On Friday, the most-active Brent crude contract closed almost flat at $51.95 and the Nymex West Texas Intermediate closing 0.18 per cent lower at $50.35.
“We are expecting a mild increase of crude prices all the way to meeting, and then some correction while the market reconciles the outcome of the meeting with the expectations,” Francisco Quintana, Head of Strategy, Foresight Advisors told Gulf News in an email. Quintana expects $60 per barrel in a few weeks.
Naeem Aslam, chief market analyst with Think Forex, also expects oil prices to be rangebound. He expects Brent to witness upside of $55 per barrel, and WTI to remain in the range of $47-$52 per barrel.
Oil prices have gained more than $10 per barrel or a fifth after Saudi Arabia, the world’s largest exporter of oil, the UAE and other Opec members called for steps to stabilise the oil market. Saudi Arabia and other Opec members along with Russia have agreed to cut output, with the details to be worked out at the regular Opec meeting at Vienna in late November.
“It is important to see a united front with respect to Opec. We believe Saudi Arabia is playing a major role in this Opec move. They are determined to stabilise the price, and so is Russia. They want to cut their supplies regardless of what the producers are saying. We are seeing a very coherent action by oil suppliers,” said Think Forex’s Aslam.
A stronger dollar ahead of US elections may also act as a headwind, he added.
The rigs drilling oil in the US have been rising as oil prices recover. The number of rigs drilling for oil in the US rose again this week, extending one of its best recoveries with no cuts for 16 straight weeks.
Drillers added four oil rigs in the week to October 14, bringing the count up to 432, the most since February, but still below 595 rigs a year ago, according to energy services firm Baker Hughes Inc.
“The short lead time to increasing production in US shale oil wells, combined with producers focusing on the lowest cost and most efficient basins, has effectively reduced the possibility of a significant increase in prices from current levels,” said Vaqar Zuberi, Head of Research — Hedge Funds/Portfolio Manager — Multi Manager Funds at Mirabaud Asset Management.