Yesterday oil prices continued to fall sharply on US crude inventories increasing by 0.4 million barrels. WTI fell 2.1% to $51.77 on the NYMEX.
Today WTI has gained 1.6% to $52.65, to the high area of yesterday.
Currently WTI is trading at $52.46 at 2:45 p.m. GMT+7 and can go down from here due to the following factors:
- Iraq’s crude oil exports rose to 3.187 million barrels/day in June.
- According to Deloitte Global, OPEC need higher oil prices to be able to balance the their budgets. Breakeven prices for Libya is $184, $145 for Ecuador, $131 for Iran, $122 for Nigeria , $106 for Saudi Arabia, $98 for Angola , $77 for UAE, $60 for Qatar and $54 for Kuwait. Not as rich as Saudi Arabia or UAE, along with political and geographical turmoils, the total foreign exchange reserves of Iraq, Iran and Nigeria is less than 200 billion dollars, making it impossible for them to survive at such a low price. While Saudi Arabia has yet been convinced to cut quotas to drive up prices, these countries could only increase exports to compensate for the deficit and diversify revenue sources.
- Meanwhile, breakeven price for WTI is about $40, so the US will be able to withstand longer than some members of OPEC. Current prices can not yet draw the output to fall, but instead, with just a little price recovery US will come back to the market with more efficient productivity. Oversupply will linger for some more time.
Oil prices may fall back to the 61.8 Fibo at $51.20 – $59.95.
Oil prices may increase because:
- United Arab Emirates (UAE) is likely to cut exports of crude oil in the fourth quarter because they planned to double the capacity of Ruwais refinery to 1 million barrels/day and serve high domestic demand. In May, the UAE has exported 2.8 million barrels/day. For a while ago, Saudi Arab has also temporarily reduced exports to meet high domestic demand, which helps soothe temporary oversupply.
- Crude oil inventories rose 3.2% in Japan to 101.62 million barrels through July 4th, according to the Petroleum Association of Japan. Despite sluggish economic growth has put a brake on commercial oil demand, but increasing strategic storage demand in the Asian can support the oil price.
Oil prices may rise to $ 50 in price Fibo $ 53.30.
Forecast: oil prices generally remained in the downtrend, without any surprises, oil prices will continue to fall to around $51.00.