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Oil prices forecasted to settle lower over the course of the second quarter say Barclays

Details: Category: Oil | Brent and WTI Crude; Published on Tuesday, 10 April 2012 11:29

Sam ison

Oil Prices: The brent crude oil price (May) is over a percent lower on yesterday at 121.32.

The WTI crude oil price is just over a half percent lower at 102.25.

A look at the charts show that since brent crude prices settled into the range north of 121 USD in mid-February the price has been quick to bounce higher from the lower end of the range.

Today suggests the oil price could be content to linger at these lower levels, indeed a break further down the charts is possible.

Barclays have today warned that, from a fundamental point of view, oil prices are likely to turn softer in the second quarter of 2012.

Amrita Sen at Barclays says:

"With prices already high and with no momentum to draw on, it is likely to take a significant catalyst to generate any significant and sustained upside in Q2.

"Thus, we expect a calmer Q2 for oil markets, with dampening factors including potential strategic stock releases and the unlikelihood of military escalation against Iran in Q2.

"On the former, it seems likely that the diplomatic and bureaucratic process leading up to a reserve release announcement may have already started.

"There is clearly a strong desire from several governments to put as large a dampener on oil prices as quickly as possible.

"While there is still considerable scepticism about the need for or desirability of a release among many IEA members and, most likely, IEA officials, ultimately we would expect those reservations to be overcome, if nothing else by a desire to avoid the appearance of a drift to unilateralism in reserve use policy."