Brent crude price to be in $70 to $80-85 range in next 2-3 months: Geoff Dennis
Geoff Dennis, Independent Emerging Markets Commentator, says the Chinese economy is struggling, and there is no obvious reason why that growth rate is going to turn upward in the near term. Also, although the US economy is in reasonable shape and ought to avoid recession, the chances of an acceleration in growth in the US are relatively limited. So, he does not see a big surge in oil prices despite delay in output increase.
What is your reading of OPEC Plus's decision to stall the hike in production by two months? This has had a knee-jerk reaction on crude oil prices, which were on a very slippery slope. But do you think the price rise will be sustained?
Geoff Dennis: What is happening here is that they are forming the bottom end of a trading range. It was inevitable at some point that OPEC Plus would delay this output increase because there have been several factors pulling crude oil prices lower in the last few weeks, including worries about the US economy, worries about the Chinese economy, expectations that Libyan oil will come back on the market shortly – although that is not a big factor. Also, US inventories have been pretty strong.
Two of those factors have now reversed. One is a fall in the inventories and now Opec Plus has cancelled the output increase, at least for now. Those factors had driven the prices down. This is what is causing the rebound. I suspect we have probably hit bottom for the time being and we are beginning to form a bit of a trading range here.
What kind of trading range do you expect
