Oil market in consolidation phase – Commerzbank

Dr Jörg Krämer, Chief Economist at Commerzbank, suggests that the recovery rally on the oil market appears to be over: at around $48 per barrel, Brent costs 80% more per barrel than at its 12-year low in mid January.

Key Quotes

“In the short term, prices could retreat further as the very speculatively driven price recovery (still) lacks fundamental support.

That said, the supply surplus on the oil market will gradually shrink. Firstly, US oil production has meanwhile declined: at the end of April it was almost 800,000 barrels per day lower than at its peak last year. Up to September, it should fall by a further 700,000 barrels a day.

Furthermore, global oil demand in 2016 will also continue to pick up at an above-average rate on the back of low prices.

Consequently, shrinking oversupply in the second half of the year should drive a lasting price recovery. We envisage a price of $50 per barrel at the end of 2016.”