Oil prices back in $85 to $90 trading range, in mixed week

Oil prices are back trading in the $85 to $90 range on Friday as a mixed week of news and data in the western world tests crude oil’s support levels.

US Light crude oil futures for June delivery, rose to $85.60 a barrel on the NYMEX, while in London, Brent crude oil futures for June delivery was up to $87.11 per barrel on the ICE Futures Exchange.

“We still anticipate an unusually difficult trading environment going forward, with prices gyrating within about the $80 to $88 zone well into next month in response to daily stock market shifts, with the euro zone situation providing some background influence,” said Jim Ritterbusch, president of trading advisory firm Ritterbusch & Associates.

Front month contracts for crude oil is currently priced below forward contracts, indicating there isn’t any concern about near term oil supply, even with signs of an economic recovery.

This pricing structure, called contango, encourages buying relatively cheap oil and putting it in storage to sell later at higher prices. But traders said it increases the risk of a steep price correction later, if demand fails to materialise.

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