Oil prices on Thursday maintained its balance 24 hours after plummeting which was buoyed by tensions emanating from Iran after it launched more than a dozen of missiles on United States’ army bases in Iraq on Wednesday, however, analysts warn that further declines may creep in.
The U.S. Brent crude futures were dipped by 4.1 percent at 5 cents for $65.40 per barrel early hours on Wednesday while West Texas Intermediate (WTI) futures surged slightly up 1 cent to $59.63 per barrel after falling nearly 5 percent previous trading sessions.
This was against the forecast given by analysts from J.P Morgan with a projection that Brent crude futures could maintain an average of $64.50 per barrel this year.
The investment bank noted that oil prices volatility will be affected by a couple of market activities such as disruptions in supply among marketers and price regulations from U.S. producers.
“The impact on oil prices will depend on (the) extent of supply disruption versus available spare capacity, global oil inventories and reaction to oil price from U.S. producers,” the bank said in a commodities research note.
Also, another analyst, Greg Priddy at Stratfor oil, warned that marketers need to be aware adding that further declines may emerge despite the ease in the Middle East is yet to be ascertained as pockets of militia activities are still visible in the region.
“Our view remains that in the absence of actual losses from conflict with Iran, the market will see mild downward pressure in Q1 on inventory builds. We need to be guarded about further sharp declines this week, as we will probably see more activity by proxy militias in Iraq,” Priddy warned.
Jeffery Halley, senior market analyst at OANDA noted that the gain experienced over the last 24 hours have restored some sort of confidence on oil marketers thereby giving directions on how prices would emerge in the coming days.
“An 8 per cent range in the last 24 hours has probably cleaned up all the short-term positioning, long or short, and left market participants a bit breathless,” he said.
According to market data from the Energy Information Administration (EIA) crude oil stocks on Wednesday were up by 1.2 million barrels in the first week of January to reach 431.1 million barrels.