KBC Market Research Desk
KBC Bank
Crude
Price of the US benchmark WTI fell to a new six-year low yesterday as the market probably revised its expectations for a rebound in crude oil prices due to persisting worries about crude supply glut.
Though the price spreads do not suggest any imminent problems with crude storage – globally, Reuters reported that some tankers booked for floating storage were even cancelled as it was not economical to store oil on sea – we continue to bet that there is still some room left for decline in (short-term) crude oil prices in weeks ahead. We also think that a renewed widening of a spread between Brent and WTI is rather likely in weeks to come as we expect more pressure on WTI due to still relatively strong increase in US crude inventories.
As for the price of Brent, it also fell by about 2.3% yesterday while the contango in the front-end of the forward curve remained broadly stable as the April contract expired. At the time of writing of this note, after opening above 54 USD/bbl, the oil price (ICE May contract) is seen back below that mark and is therefore close to a six-week low hit yesterday.
Chart of the day:
WTI price hit a new six-year low yesterday.
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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