Oil prices may stay trading between $65 to $75 a barrel

A confounding mix of factors, some propelling a hike in oil prices and some its decline will keep oil prices trading between $65 and $75 a barrel, analysts said. A weakening of dollar, expected over the long term is however expected to bring prices up, they said.

“Oil is below $70 and there is a concern that if it breaks $65, it is going to hit $60,” Hassan Arabi, CEO of Gulfmena Alternative Investments, told Reuters. The comment came even as JPMorgan Chase warned that Opec members could cut output to keep oil prices at $60 a barrel. Saudi Arabia, Kuwait and the UAE could jointly take-off 0.5 million barrels of oil production a day in such a case, JPMorgan Chase said.

Analysts said while a weak dollar is holding oil prices back, emerging geo-political equations in the Middle East are propelling it. While high level of inventories have brought down oil prices, an expected cut in production by key suppliers will fuel it back to higher levels.

“Oil prices have seen a decline recently due to an increase in crude inventory in the United States, which has shifted the focus of investors back on the fundamentals and has also pointed towards a sluggish recovery in crude demand.

Until the time the global economic growth gathers momentum, it will be hard for crude to break past its recent peak of $75 per barrel. The market participants are awaiting a positive catalyst which is expected to take the crude oil prices higher,” said Dheeraj Shahdadpuri a Dubai International Financial Centre-based analyst.

Crude oil prices felt the bulk of the price correction, dropping to a low of $65 a barrel, down from $75 a barrel a month ago. In spite of the correction, oil prices are within the trading range in place since June of $60 to $75 a barrel.

Tags:  oil trading