Crude Oil Bounces Back
After starting the week losing more than 2 percent of their value, the West Texas Intermediate (WTI) and Brent crude oil futures contracts regained momentum Tuesday.
The February WTI futures price picked up $1.60 during Tuesday’s session and settled at $52.11 per barrel. The benchmark peaked at $52.30 and bottomed out at $50.64.
Returning to a position above the psychologically important $60 mark was the March Brent contract. The Brent gained $1.65 to end the day at $60.64 per barrel.
One oil market observer told Rigzone that a major investment bank has been rallying investors to do their part to support a certain energy commodities narrative for 2019.
“Goldman Sachs says it won’t be ‘hoodwinked’ again on commodities as it urges investors to buy into this year’s comeback story in oil, despite last year’s spectacular collapse,” Barani Krishnan, senior analyst with Investing.com, told Rigzone. “Saudi Energy Minister Khalid al-Falih, meanwhile, is doing his best to drive the bullish charge in oil, vowing to cut hundreds of thousands of barrels per day in supply.”
Krishnan noted, however, that other factors are complicating the narrative.
“But the reality is, multiple structural changes within oil make it virtually impossible to forecast trends or prices with a high degree of confidence,” Krishnan continued. “Shale is the bad boy that often takes the rap for any price downside in oil. But look closely and you’ll also see that, on any given day, it’s either the stock market of China that’s yanking oil around.”
Such drivers are causing wild price spikes, Krishnan pointed out.
“So instead of predictable outcomes or gradual shifts, you’re going to have untoward volatility in quick bursts,” Krishnan said. “For the oil producers, it means being thankful for any price rebound and moderate in CAPEX planning.”
Helping to bolster the comeback story, at least Tuesday, was reformulated gasoline (RBOB) for February delivery. RBOB gained just under a nickel to settle at $1.41 per gallon.