Crude oil may weaken to $50/bbl in end-Q2 – analyst

06 May 2009 06:43  [Source: ICIS news]

SINGAPORE (ICIS news)--Crude futures may soften to $50/bbl (€37.5/bbl) towards the second half of the year on expectations that the global economy was likely to remain weak, said a chief commodity strategist at the Commonwealth Bank of Australia (CBA).

At 12:00pm Singapore time (0500 GMT), NYMEX light crude sweet for June delivery was steady at $53.84/bbl after closing at its highest level so far this year above $54/bbl on Tuesday.

“My expectation is that oil prices will probably remain choppy. Before the end of the current quarter, we will probably see it back to $50/bbl,” said CBA’s David Moore.

“The inventory situation remains quite comfortable but there is evidence that consumption in the US remains weak,” he said.

Encouraging manufacturing data out of China and hopes that the US recession was bottoming out had helped spur recent gains in crude prices.

China’s industrial production had been improving with the aid of the government’s combined fiscal and monetary measures that helped ease access to credits.

“[Economic] numbers became more positive in recent weeks so those are supportive in the near-term,” Moore said.

But the global economy was dealing with the most gruelling recession to hit in decades and any meaningful gain in crude prices may not be possible due to lack of demand, the analyst said.

CBA expects oil prices to average $50/bbl this year mostly due to OPEC’s curbs on supply, Moore added.

($1 = €0.75)

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By: Pearl Bantillo
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