One of the most widely used commodities in the world is crude oil. As many sectors of the society utilize this liquid commodity, we make sure we are updated with the recent developments regarding its prices. When we turn to the news, there are two names we usually hear as top producers of oil- the West Texas Intermediate of the United States and the international benchmark Brent crude oil.
Apparently, most people are more familiar with the WTI while some remain scratching their heads when it comes to the Brent oil.
Due to the persisting supply glut in the market, Brent crude prices have been wounded, tumbling from $100 per barrel two years ago to just below $50 per barrel today.
Can the Brent futures bounce back?
In the first two quarters of 2016, Brent started strong and shrugged off any impact from the global glut as it rose 6% and 25% respectively in the first six months.
But the gain was easily erased in the following quarter as the global glut continued hurting oil prices while the members Organization of the Petroleum Exporting Countries had a limbo in finalizing a production cut which could help stabilize the market price.
The benchmark registered its first quarterly decline of the year as it fell 7.7% down, showing a seesaw affair with the global market, prompted by the doubts on OPEC to seal the agreement in their meeting in Algiers.
However, some hawkish remarks from the bloc drove the benchmark back to bullish market, gaining 20% strength in two weeks of the month of August with the news that the production freeze is in the offing.
But as the dollar gained strength due to the surprising Donald Trump victory in the presidential elections and as investors doubt the credibility of the OPEC to make the deal possible, Brent was again seesawing.
Analysts have forecasted in the tail end of October that the benchmark will remain bearish throughout the 2016. A total of 35 economist surveyed by Reuters believed that its price would be unchanged at $44.78 per barrel.
But as unexpected events continued to surprise market, Brent went through a series of ups and downs in the final quarter. And just as recently, when the non-OPEC members agreed to participate in the planned production curb, it surged to its highest level since mid-2015 at $57.89.
Erasing the Pullbacks?
As the OPEC provided more hopes on its attempt to further pump oil prices, Brent will continue to gain ground. Will we see Brent make a strong rebound in 2017?
Nothing is cast in stones. But if the passage “a rising tide will lift all boats,” then Brent is up to erase all the pullbacks.