The international oil benchmark Brent Crude will likely range-trade in the $40 to $43 a barrel band until after the U.S. election on November 3, according to OCBC Bank.
“We continue to expect Brent to trend from $40-$43/bbl, as we head ever closer to the US Presidential elections,” OCBC Bank’s strategists said in their weekly commodity outlook.
OPEC’s jawboning sent oil prices spiking last Thursday, with Brent Crude breaking above $43 per barrel, the bank said, noting that three weeks ago, Saudi Arabia’s ‘you will “ouch like hell” warning if you bet against oil’ also sent prices rising, only to correct in the following days.
“We expect the same scenario to play out here, which means that even though Brent broke above the $43/bbl level last Thursday, we expect it to correct back into the $40- $43/bbl range,” OCBC Bank said.
“We continue to expect Brent to range trade until after the US Presidential elections,” according to the strategists.
On Sunday, Goldman Sachs said in a note that a Joe Biden win will likely be an upward catalyst for oil prices because it will increase costs for the shale patch and will likely result in a weaker U.S. dollar.
Goldman Sachs expects a Biden Administration will tighten regulation, taxes, methane restrictions, and new drilling for the oil industry, which, as a whole, will raise the cost of U.S. shale production, leading to “shale supply headwinds.”
After jumping by 10 percent last week for their best weekly performance since June, oil prices dropped on Monday as last week’s supply concerns vanished with the Norwegian oil strike ended, U.S. Gulf production coming online following Hurricane Delta, and Libya restarting its biggest oilfield, Sharara.
Early on Tuesday, oil prices were up by more than 1.5 percent following a rebound in Chinese crude oil imports, which rose by 5.6 percent from August to 11.85 million bpd in September.
By Tsvetana Paraskova for Oilprice.com
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