The recent weakness in the oil price seems “dramatic,” according to Jack Allardyce, an oil and gas research analyst at Cantor Fitzgerald Europe.
“It is difficult to say whether $60 is the new, as there doesn’t seem to be a ‘normal’ at the moment. The recent weakness seems dramatic given the lack of actual catalysts,” Allardyce said in a statement sent to Rigzone.
“It seems to have been driven by a wider impending sense of doom amidst weak equities, geopolitics, subsequent softening demand and increasing supply,” he added.
The Cantor Fitzgerald Europe representative stated that “a lot” depends on both the result of US-Sino talks at the G20 this week and OPEC and it’s allies’ meeting on December 6.
“It looks as though the market has already decided that the mooted 1.4 million barrels of oil per day cut to output isn’t enough to offset the decline in demand growth projections, so if that is the number then the current level could remain into the new year, or we might see some more weakness,” Allardyce stated.
“If they opt to make deeper cuts, which seems unlikely given how much the United States is leaning on the Saudi’s and Russia’s apparent lack of enthusiasm, then some sort of recovery is likely. As ever, benchmarks seem to move more dramatically than they really should given underlying fundamentals,” he added.
In a statement sent to Rigzone on Friday, Michael Burns, an oil and gas partner at law firm Ashurst, said “macro politics appear hard to separate from oil price economics”.
“It will be interesting to see the effect of any bilateral political discussions between Saudi Arabia and the United States on the outcome of the multilateral OPEC discussions due to take place in December,” he added.
