Oil Price Are Sliding Again — but Will They Hit the Mid-$20s?

Saudi Arabia previously has said it would be willing to work with other producers to keep stability in the prices, but the comments made on Monday arrived when the futures prices had barely been holding above lows of more than 2 months. What will happen today?

USA crude’s West Texas Intermediate (WTI) futures increased 32 cents or 0.77 percent at $42.07 a barrel as of 0048 GMT after hitting $42.18 a barrel earlier in the session.

However, with weaker seasonal demand due to the refinery maintenance season, oil stockpiles in the US continue to grow and are at levels that haven’t been seen at this time of year for at least 80 years, according to the U.S. Energy Information Administration.

Venezuela, member of the Organization of Petroleum Exporting Countries (OPEC), predicted on Sunday that oil prices can drop to as much as mid-20s per barrel, if the exporting group does not change its production strategy.

Light, sweet crude for January delivery rose $1.27, or 3%, to $43.02 a barrel on the NY Mercantile Exchange. “But all said, they are the biggest movers in OPEC, so their statement is having a positive impact”. A growing discount between the front month and forward contracts which traded near a record wide 8 per barrel has sparked talk of traders storing more crude in the hope of delivering later at higher prices. US WTI crude traded 30 cents lower at 40.24 per barrel.

January contract dropped 54 cents, or 1.29%, to $41.36 a barrel against its previous settlement at $41.90.

Daniel Ang at Phillip Futures noted that a string of United States economic data scheduled for release this week could test the U.S. dollar’s recent strength. Expectations of a stronger USA currency is also bearish for oil prices with the market projecting the U.S. Federal Reserve will raise interest rates at its next meeting in December. We don’t agree with the position that says the market, some way, is going to dictate the price of crude oil.

Benchmark Brent futures were up 54 cents, or 1.2 per cent. It rose more than $1 on the Saudi statement, then surrendered those gains before rebounding.

“News of a military jet crashing in Syria is a reminder that there is still substantial risk in the Middle East”, said Bjarne Schieldrop, commodities analyst at SEB Markets. “S. crude output and seasonal demand provide some support to oil at low prices”.