It has been something of a mixed bag for oil futures in July as we have seen conflicting forces impacting the price of key oil futures contracts, like Brent crude and WTI.
Oil futures forecast – no key supports
The key supports for crude oil futures are few and far between, and any oil futures forecast over the short term – say, the next 2-3 months – is going to look bearish. Firstly there is speculation that OPEC is going to increase production while global oil demand growth is projected to soften in the second half of this year as consumers adjust to higher oil prices.
Global inventories remain healthy and below the five year average despite a slight uptick on stockpiles.
Libya has been back in the energy news. Remember, it was a major oil producer under the regime of Muammar Gadaffi, but oil supplies from this North African country have been virtually turned off during the civil war that has raged there since his death. Getting Libya’s oil industry back on track has proved tricky.
Libya’s National Oil Corporation said last week that it would reopen four export oil terminals that have been closed since late June. Elsewhere in the region, there has been a reported ‘output surge’ in Saudi Arabia. This has, however, been off-set by capacity issues in other markets – remember, Venezuela is on the verge of a revolution and the oil supplies there have not been what they were under Hugo Chavez. Then there are the veiled threats from Iran that it might turn off the taps.
Norway oil workers strike – one to watch this week
Also in the news this week has been the strike by oil workers in Norway which has focused the attention of European traders and holds out the prospect that we could see an uptick in Brent crude oil futures. The Norwegian oil and rig workers union has the capability to escalate the strike with more of its members walking out if there is no resolution.
The current oil futures forecast is for Brent crude futures to continue to trade in the $74-$75 area barring a total collapse of those talks in Norway. There are too many global factors at the moment to outweigh localised issues like the problems in Venezuela. Global production capacity seems able to take up the slack quite easily.
WTI oil futures continue to trade at just below the $70/bbl mark which seems to have become a key resistance point for WTI while Brent crude oil contracts are trading at under $75.
