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Strategists at OCBC bank continue to expect Brent to trend from $40-$43/bbl heading ever closer to the US Presidential elections while OPEC is jawboning again.

Key quotes

“Oil prices spiked last Thursday after OPEC remarked that ‘the worst is behind for the oil market.’ Recall three weeks ago, Saudi Arabia took its war against short-sellers public by pledging to make them ‘ouch like hell’, only to have oil prices retraced within a couple of days. We expect the same scenario to play out here, which means that even though Brent broke above the $43/bbl level last Thursday, we expect it to correct back into the $40- $43/bbl range.” 

“Crack margins for gasoline declined on the week while that of diesel rose, adding to further mixed signals. Separately, Saudi Arabia raised its OSP for its Arab Light crude oil by 10c/bbl to -40c/bbl off the Oman/Dubai average, which was largely consistent with market expectations.” 

“We continue to expect Brent to range trade until after the US Presidential elections.”