Oil Market Deja Vu Triggers Predictions of a Return to $30
Oil’s climb above $45 a barrel is reassuring influential figures from BP Plc to the International Energy Agency that the industry is finally recovering from the worst slump in a generation. Others say the market is about to fall into the same trap as last year.
There’s a sense of deja vu at Commerzbank AG, BNP Paribas SA and UBS Group AG, who say crude’s gain of about 70 percent from a 12-year low in January resembles the recovery that took hold this time last year -- only to sputter out by May as the supply glut endured. Prices will sink back towards $30 a barrel in the coming weeks, BNP and UBS warn.
“There are dangerous parallels to 2015,” said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt. “The market already appears overheated and a correction is overdue.”
Last year, Brent crude rose 45 percent from January to almost $68 in May as traders anticipated a rapid decrease in U.S. output as drilling rigs were idled. The rally reversed when production kept rising, peaking at 9.61 million barrels a day in June 2015, a year after the price slump began. While drilling cutbacks eventually took their toll and the nation’s output slipped to 8.9 million barrels a day last week, the current recovery could boost industry activity and slow the decline.
more:
http://www.bloomberg.com/news/articles/2016-04-29/oil-market-deja-vu-triggers-predictions-of-a-return-to-30
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