Crude may remain rangebound for a while: Argus Media

Brent crude has been pretty much rangebound between USD 110-115 per barrel, since the past couple of weeks or months now. In an interview to CNBC-TV18, Azlin Ahmad, Argus Media says crude will remain rangebound for a while.

Below is the edited transcript of her interview with CNBC-TV18's Latha Venkatesh and Ekta Batra. Q: What are the triggers for Brent crude going forward? What would you be monitoring most closely? A: I think that it will remain rangebound for a while because it is stuck in between the bullish factors in terms of the continued violence between Turkey and Syria and just concerns that it could spread to the other producing nations like Iran and Iraq. So, I think market will watch that in terms of whether it will escalate or whether things will settle down. If things settle down I think we could see prices a lot lower than where they are now. But the other factor is still the anxiety over the demand growth in the faltering Euro zone economy. That is unlikely to be resolved or settled in the short-term. That is going to keep prices quite rangebound. Q: Give us an idea of both scenarios in the event that the Syrian-Turkish escalation or Iran-Israel deescalates, what is the kind of range you see for crude for the remaining part of 2012? If things persist as they are now then what is the range? A: Right now, if things do not escalate and if things continue just as they are, the expectation is that the Brent prices could settle down to about probably USD 110 per barrel or around that. If things get worse and particularly if Iran is involved and threatens its exports then I think it is anybody’s guess how high the prices could go. Brent could easily go up above USD 120 or more. I do not think anyone can predict where it is going to go because it will be quite serious, if there is significant Iran export disruption. Q: Sometime back we have seen a lot of volatility come in with regards to WTI crude. Are there any sort of indicators in terms of the differential that we are working in between WTI and Brent? Which are the factors affecting both? A: We saw the spread widen out to about USD 23 per barrel this week. That is the widest spread so far this year, but it is not historically wide spread because we have seen it as wide as USD 27 per barrel previously. So, in terms of the spread, I think that it is going to remain around USD 20 per barrel level just because WTI is less susceptible to what is happening in the Middle East and what is happening in Europe and also because production in the US is continuing to grow. Crude stocks in the US are expected to rise. That could curb the gains in WTI over the next three-six months. So, I don’t think we are going to see a significant narrowing in the spread between WTI and Brent. I think it is still going to remain around USD 20 per barrel atleast.