Jun 15, 2012, 04.19 PM IST

See crude in $90-100/bbl range next quarter: Fat Prophet

David Lennox, resources analyst at Fat Prophet says, he is expecting crude to trade probably between USD 90 and USD 100 per barrel. “We cannot see it wanting to go above that level, but we can certainly see risk perhaps on the downside. So, in the next quarter, that is the range that we would be looking for,” he adds.

David Lennox, Analyst ,Fat Prophets

Expertise : Commodities

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Producer group OPEC agreed to keep its oil output target unchanged for the second half of the year. In an interview to CNBC-TV18, David Lennox, resources analyst at Fat Prophet says, if oil production does stay at that particular rate and there is no claw back in production, he would expect Brent prices to probably weaken up over the next few days.

He is expecting crude to trade probably between USD 90 and USD 100 per barrel. “We cannot see it wanting to go above that level, but we can certainly see risk perhaps on the downside. So, in the next quarter, that is the range that we would be looking for,” he adds.

Below is the edited transcript of his interview with CNBC-TV18's Latha Venkatesh and Ekta Batra. Also watch the accompanying video.

Q: The OPEC meet took place in Vienna. What was the outcome of the OPEC meet? What exactly is the implication on the crude market?

A: The OPEC cartel decided not to change the 30 million barrel cap. They have kept it the same. However, the caps probably not really worth much more than voice at this point in time because the OPEC group of countries are infact producing oil at Tibet, 31 million barrels a day. So, they are over that cap. If oil production does stay at that particular rate and we don’t see any claw back in production, we’d expect Brent prices to probably weaken up over the next few days.

Q: The OPEC Secretary General Abdullah al-Badri himself said that it is about 1.6 million barrels that they are producing more than the 30 million target. Would you expect Saudi Arabia to take up the responsibility of reducing the production? Would you read that there is some kind of floor to crude prices now?

A: At this point in time, we are watching very closely the OPEC countries to just see where infact they will start reducing production. Saudi Arabia has been one of the key nations in terms of supporting a lower price for crude, when the price did obviously escalate throughout last year.

Given statements that they have made in the past, perhaps they will be the first to react and start closing in production. And if that does happen, they are of a size of an influence where they will able to really put a bit of stability under the price of crude at this particular point of time. It might be a little bit lower, maybe closer to USD 90 per barrel rather than USD 97-98 per barrel where it is trading at currently. That is what we are looking for. That is going to be the key going forward.

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