Last month we detected a feeling in the market that it did not quite believe $80/bbl was justified; indeed, the price duly declined after a brief return to the high $70s in the week ending 1-Dec '09. Subsequently, WTI fell even further, dropping below $70/bbl due to an increase in crude stocks at Cushing, the delivery point for the WTI futures contract. At the time of writing, Jan-10 WTI is above $73/bbl, after an earlier bout of very cold weather in North America and a current freezing snap in much of Western Europe. However, lingering worries about the strength of the economic recovery in the developed world, concerns among bond vigilantes about the creditworthiness of certain countries and an easing in the oil market's fundamentals, all point to a softening of the oil price in the new year, which on present indications will continue to trend downwards into the spring and summer, barring any unforeseen events or further cuts from OPEC.
展开▼
