The tension in the Middle-East has had a considerable impact on oil prices and David Lennox of Fat Prophets believes prices are not likely to see a significant downside at the moment. According to him, Brent crude may range between USD 100 to 110.
The tension in the Middle-East has had a considerable impact on oil prices and David Lennox of Fat Prophets believes prices are not likely to see a significant downside at the moment. According to him, Brent crude may range between USD 100 to 110 whereas West Texas may hover around USD 80 to 90.
Also read: Gold may test Rs 31500-31450: Nirmal Bang
As far as gold is concerned, Lennox feels it is very difficult to predict its direction. However, according to him, the US fiscal cliff may have an impact on the golden metal in the short term.
Here is the edited transcript of the interview on CNBC-TV18.
Q: What is the investor world making of the developments in Middle East and what impact it will have on crude?
A: I guess we have seen a relatively mild response from all the traders to what is happening on the Gaza Strip. Till now, it was been seen as a very local conflict, given that it is considerably remote from the major oil assets and away from any of the major transporting routes for oil.
Until very recently we saw quite muted prices in terms of what was happening on the Gaza Strip. The reason for the spike was the fact that the world has finally worked out the change in that conflict and Hamas has now got the ability to actually strike at Jerusalem as well as Tel Aviv. That does give the Israelis some thought to perhaps do a ground incursion to increase its buffer zones of safety.
Q: How will that have a secular impact on crude? One thought that with Hamas extending or at least a news of a ceasefire coming in from Gaza, you should see a substantial reduction in crude prices. Immediately would you see more falls in crude? For the longer term would this Hamas development have a bullish impact on crude?
A: We would not expect to see a significant downward move in the price of oil at this point in time. We have for sometime been calling the risk that we saw in the oil price and said it would go lower. We do think that as we are starting to look into 2013, there is probably a basis on which we can see oil prices actually starting to base out. We can start removing that downside risk that we have seen.
We say that because we are starting to see some further strength in US housing. We do think that it will lead to consumer confidence increasing in the US and of course with that we believe it will come to the use of petroleum products jumping back to their vehicles. Going forward, we would be now starting to look at oil prices probably basing out around USD 80-90 for West Texas and probably somewhere around USD 100-110 for Brent just for the foreseeable future.
ADS BY GOOGLE
video of the day
Rupee weakness modest, see yields at 7.60% in Q1: Deutsche