Oil market is stuck in a tight trading range – BAML
|Global crude oil prices have remained in a relatively narrow range all year, with Brent trading in a band of $44 to $57/bbl, notes the analysis team at BofA Merrill Lynch.
Key Quotes
“Meanwhile, the term structure of the Brent crude oil market has moved from a steep contango a year ago into a slightly backwardated curve in recent weeks, some petroleum product markets are showing firm backwardation, and stocks are starting to normalize. So OPEC’s strategy to “keep calm and carry on” is finally starting to work. However, any move by the cartel to cut production further and accelerate the rebalancing process will likely lead to a permanent market share loss against US producers. With US shale oil breakevens coming down to a tight range of $40 to $60/bbl and swing capacity of around 2mn b/d in this price range, this likely means that oil prices are poised to trade around $50/bbl for the next six quarters.”
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