Following a spectacular rise two days ago, Brent crude oil has slowed down its ascent and fluctuates below the $65 mark on Friday. Prices resumed the bullish bias against the backdrop of a weakening U.S. dollar, signs of increasing global demand and a high discipline within OPEC. However, the upside potential still looks limited amid further remarkable growth in US shale oil production.
The OPEC members’ supportive comments this week have contributed significantly to the oil prices recovery, but it’s obviously not enough to provide a steady boost to the market, which is still focused on the negative signals from the American drillers and producers. Additionally, Libya’s crude production was said to increase from 1.05 million barrels a day to 1.1 million. Nigeria is also planning to ramp up its production, by 250 000 barrels a day by 2020. Therefore, as long as the American industry continues to signal a new wave of shale revolution, Brent’s bullish potential will likely remain limited. In the short-term, the price is unlikely to make a decisive break above the $65 level, especially as the market expects fresh Baker Hughes data. Should the report mark another increase in the number of oil rigs, Brent risks turning negative on the day below $64.
By Helen Rush
Senior Analyst at Capital Markets