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Brent oil price dips under $104, oil supply concerns remain
Published on June 27, 2011 by oilprices · No CommentsBrent oil futures open today’s trading session under $104 after last week’s bold announcement by the IEA to add 60 million barrels of oil to the market has investors and traders wondering just how much this will affect oil prices in the medium term.
Latest Brent Oil Price
In London, Brent crude oil futures for August 2011 delivery was trading at $103.54 a barrel, 06.40 GMT this morning on the ICE Futures Exchange.
IEA Reserve Release
Caroline Bain, of the Economist Intelligence Unit, said “Although the immediate impact of the IEA’s reserve release will be to depress prices, in the more medium term, it could actually be bullish for oil prices. Reserves are finite and cannot be released for ever.
“Furthermore, it suggests that the IEA is concerned about tightness in the oil market. An additional future price-positive development will be the need to rebuild stocks in IEA member countries.”
Meanwhile, Adam Sieminski and Soozhana Choi of Deutsche Bank explain that the global watchdog will probably have to give in to higher prices at some point.
“The IEA may be tempted to extend the draw for an additional 30 days, but at some point we expect that fundamentally tighter markets will force the agency to surrender to higher prices. For now, the additional strategic oil supply will have the effect of lowering prices.
“In our view, fundamental dynamics signalling a tight market will be reasserted and markets will react accordingly.”
Tags: brent, brent oil price, oil, oil prices, oil supply concerns, supply, trading