Baku. 16 April. REPORT.AZ/ WTI crude oil prices are likely to fall on the world market, despite recent positive trend. Report infomrs, Saxo Bank commodities head Ole Hansen feels that it is WTI oil that is primed to go down, even if it is presently rangebound.
According to Hansen, there are a number of conflicting factors holding WTI crude in its present $50-54/barrel range, from instability in Yemen to the prospect of an Iranian deal to inventories.
A potential recovery in oil prices remains unsupported by Opec as the total March production breached the 31 million barrel mark for the first time since August 2013.
With Iraq, Iran and Libya all raising production during a month where Saudi Arabia, according to its own data, produced a record 10.3 million barrels per day, the cartel's stated target of 30 million barrels has now been breached for the past 10 months in a row.
Doubts about how quickly a deal over Iran's nuclear programme can be solved provided some support to prices after Iranian supreme leader Ayatollah Ali Khamenei demanded that all sanctions on Iran should be lifted on the same day as any final agreement was reached. The US opposes this, with its position being that sanctions will only be removed gradually.
Hansen accepts that US oil production is seemingly flattening out but points out that huge inventory levels have to work their way through the system before we can expect significant impact on the WTI price.
With production once again picking up after a drop the previous week, market participants are still left guessing about when a 50% reduction in rig count (since last October) will finally begin to have a negative impact on production.
"WTI is still rangebound and we still need to see a major pickup in demand," he says. "Opec is now producing more than 31 million barrels and we see the likes of Russia continuing to churn out more oil," says Hansen. "US storage hub Cushing is also just 10-15% below full capacity".