Iranian issue, disruptions in Middle East continue to weigh on crude prices. Daniel Hynes, director-commodity research at Citi Investment Research has been relatively conservative on the outlook for oil, particularly over the first quarter. He expects it to trade in a relatively tight range.
According to him, high inventories may keep WTI below USD 100 per barrel. Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video. Q: Crude, what is it that feeding prices? What kind of near-term targets are people talking about? A: The continued issue around Iran and possible supply disruptions in Middle East continue to weigh particularly on the Brent price of oil. We are seeing that play out again today. We have been relatively conservative on the outlook for oil, particularly over the first quarter and expect it to trade in a relatively tight range. But these risks, that we are seeing, such as the Iranian oil supply issue certainly have the ability to breakout of that relatively USD 10 per barrel range that we are expecting. So, if this continues to get worse then certainly the outlook for price is to spike upwards. Q: On the downside, what would you say could be the cool off on crude? What looks like the new base for prices? A: There seems to be building inventories around the world, particularly in the US. Clearly, Europe is a concern. The macro issues involved around there as well certainly have the ability to weigh on prices. For the moment, they are taking a bit of a backseat. But they have the ability to keep prices below USD 100 per barrel in the shorter-term. We think the market should be little bit tighter Q2 as the macroeconomic situation does stabilise. But certainly the ability to go below USD 100 per barrel is there in the very short-term. Q: The fear, at this point, is that for commodities like crude and several others there is a bit of a bubble building being egged on by whatDiscover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
