Oil Traders Continue To Book Profits

Oil prices eased and global markets shiver. WTI gave up 69 cents to 50.54 as trader’s book profits while Brent oil eased 60 cents to 51.93 as both oils remained near the top of their trading range. On Thursday’s oil analyst we advised traders to buy on dips and sell on peaks and the day was the perfect example of how speculators easily make profits in volatile markets.  Crude began to make its latest leg up on a series of production disruptions, from sources ranging from Nigeria to Canada. But analysts have said those disruptions could be temporary, and oil could trade lower when crude returns to the market.

“The market continues to trend higher in a nice channel, and nothing seems to be snapping it out of it,” said Gene McGillian, broker and analyst at Tradition Analytics.

“If you look at the channel from $26 up to $50, you would think the fundamental picture has changed significantly,” he said. “The fact is, technicals can drive the market for a while, but sooner or later the fundamentals are going to give you your price direction.”

Oversupply remains an issue, as Iran pumps more oil into the world market and other nations continue to produce at high levels. OPEC has also done nothing to curb its production but at its meeting last week, Saudi Arabia’s new oil minister said the market appears to be balancing and the trend is higher. (CNBC)

Crude prices may have hit new highs for the year Wednesday, but oil expert John Kilduff doesn’t expect the rally to continue.

“There’s been a spectacular run, no question about it, but I think we’re at a point here where it’s going to be hard to continue. A lot of headwinds,” the founding partner of Again Capital said in an interview with CNBC’s “Power Lunch” on Wednesday.

Kilduff, who has been bearish on oil, admitted he was “obviously wrong” in not anticipating the ongoing rally. He has been calling for crude’s run to end for the past few months.

Crude prices will continue to rise this year and that means some oil companies will probably start spending money again, two industry chief executives said Tuesday.

The global oil glut could take over a year to dry up, disappointing those thinking higher oil prices could signal the end of the industry’s woe, experts say.

BP chief economist Spencer Dale said oil prices are unlikely to rise significantly any time soon because the world still has substantial stockpiles. Dale reportedly reckons there is a surplus of about 700 million barrels of crude around the world, with half in ships and storage tanks in Western countries and the rest in emerging economies such as China.

He believes it would take 18 months or more to make major inroads into the surplus.

“The scale of the stock overhang is big,” the FT quoted Dale as saying after BP unveiled its closely watched oil data review on Wednesday. “We need to take that into account when thinking about price trends.”

US Energy Information Administration head said that the slowed investment in new oil projects over the past year will drive up prices in the future, pushing oil back up to $80 per barrel over the next ten years.

Over the short-term, EIA anticipates the international oil cartel, the Organization of Petroleum Exporting Countries (OPEC), will not cut production, Siemienski said. However, as the currently large inventory of petroleum and liquid fuels “taper off, that should bring the markets back into some kind of balance next year,” he estimated.

At OPEC’s latest meeting earlier this month, cartel members did not reach an agreement to cap oil production, which averaged 31.5 million barrels per day in 2015, and is likely to remain at that level.