Oil can be expected to lose further ground, given that doubts about OPEC production cuts persist, said Barbara Lambrecht, analyst at Commerzbank. At the same time, an increase in drilling points to a rapid recovery in US oil output.
“At the start of the week, Brent rose to a year high of just under USD 54. However, hopes that Russia would follow OPEC's lead and also cut production soon proved false. Despite all the efforts by representatives of the oil cartel to keep hopes of supply cuts alive, it seems likely that scepticism will mount and, according to the energy agencies, the market would remain in surplus until the middle of next year in the absence of production cuts.”
“The US Energy Information Administration is more optimistic with regard to US production, and has raised its forecast for next year by 200,000 barrels per day. This view is borne out by the weekly increase in US drilling. We expect Brent to drop back below USD 50 in the coming weeks.”