Oil market has priced in economic upturn – Purvin & Gertz

14 January 2010 22:53  [Source: ICIS news]

HOUSTON (ICIS news)--World oil markets have already priced in the prospect of an economic recovery, and crude should hold steady in a band on either side of $80/bbl for the next 12 months until stronger evidence of the upturn emerges, a Purvin & Gertz consultant said on Thursday.

Volumes on NYMEX crude oil futures have been creeping up and the forward curve in crude futures is "pretty aggressive" considering the current high level of inventories for oil and refined products, said Stephen Jones of the firm's Houston office.

Front-month crude futures closed down 26 cents at $79.39/bbl on Thursday.

While the signs of economic recovery have been somewhat tentative so far, the recession does appear to be over and the threat of a double-dip recession has receded, Jones said in a presentation to the Southwest Chemical Association.

"We do see improving conditions on the horizon," Jones said.

Jones also forecast that US natural gas prices would remain fairly flat over the next year, not heading significantly above $6/mmBtu until 2011.

Front-month NYMEX natural gas futures settled down 14.5 cents at $5.588/mmBtu on Thursday.

With new gas supplies from onshore shale deposits offsetting the reduced output from older fields, it was unlikely that there would be much appetite for liquefied natural gas (LNG) in the US in the next few years at least, Jones said.

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By: Stephen Burns
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