See Brent correcting at $95-$100/barrel: IHS Global

Simon Wardell, Director Global Oil, IHS Global Insight feels that crude will correct from its recent upmove (USD 104 per barrel) and will trend downwards. He sets a target for Brent at around USD 95 - USD 100 per barrel.

Also Read: Brent slips, but stays above $104 as U.S. data supports

Wardell says, oil prices have been declining on the back of global economic weakness and also reasonable supply coming through from non Organization of the Petroleum Exporting (OPEC) countries.
“If you put all those factors together, we are still seeing weakness in price, a little bit of a bounce in April, due to a combination of reasons, little bit of a bargain hunting perhaps, little bit of a geopolitical tension. But we will see prices easing off these recent bounce and trending downwards,” says Wardell in an interview to CNBC-TV18. Below is the verbatim transcript of Simon Wardell’s interview on CNBC-TV18 Q: An almost USD 10 per barrel swing in the matter of little over a month. Can you explain what has happened to Brent or even WTI because we have seen some moves there?
A: Oil prices are finding a bit of a range. Prices have come down quite a bit over the last six months and we have bottomed out about USD 95 per barrel for Brent. It was looking a little bit low. With the upsurge in violence in the Middle East and Syria in particular, concerns over Iran and more positive economic data, oil prices and oil markets are just trying to find out where that range is. As far as Brent is concerned, we seem to be between USD 95 and USD 100 per barrel. That looks like something might get established now. Q: Is it ordinary to have a USD 10 per barrel range because you pointed out some factors that might have let to price movements but could they have let to such extreme price movements for instance? The Israel air strikes on Syria only took place this weekend. Once Israel explained that, we have seen crude prices come off a bit. We haven’t seen any escalation in tensions with Iran and global economic data hasn’t been either very good or very bad or different from trends. What explains a USD 10 per barrel swing? Is a USD 10 per barrel band ordinary?
A: Couple of things are playing here as well. As far as Brent is concerned, the movement is a little bit different regarding the price movement, regarding the difference to west Texas intermediate where we are seeing prices rebound a little bit more strongly because they are getting a little bit more of oil out into the market place. There is a lot of bottom mix there. But USD 10 per barrel range isn’t that unusual in the market these days. We are talking about 10 percent of the price.
There is a lot of late desire to see oil prices go up out there in the market. People have very short memories. It was now long ago that we had oil at USD 120-130 per barrel. When people saw drifts under USD 100 per barrel, they saw it as a buying opportunity and moved back in. We have a little bit of bounce in that, also a little bit of a bounce from geopolitics. 

Oil prices have been declining on the back of global economic weakness and also reasonable supply coming through from non Organization of the Petroleum Exporting (OPEC) countries. If you put those together and we are still seeing weakness in price, a little bit of a bounce in April, due to a combination of reasons, little bit of a bargain hunting perhaps, little bit of a geopolitical tension. But we will see prices easing off these recent bounce and trending downwards.