Increase in Oil Prices May Occur with Positive Outlook on Greek Debt Deal
Benchmark crude oil prices will most likely increase soon as improvements in risk appetite develop due to the positive outlook that Greece and other creditors from the private sectors are almost nearing a debt swap deal, according to the weekly survey of the CNBC.
10 respondents participated in the survey and exactly 50% of them hopes for an increase in oil prices soon while one of the ten respondents predicts a reduction. The remaining four expect oil prices to stay stuck within a certain range.
The pledge of the Federal Reserve that keeps rates of interest at a low level of 0 to 0.25% up to the latter parts of 2014 strengthened the risk appetite in most commodities in the market and helped push a gain of $1.10 per barrel in the recent crude futures of the United States.
In the Mercantile Exchange of New York, crude futures for March delivery stayed at $99.56 per barrel. In London’s ICE Futures Europe exchange, March settlement’s Brent crude oil gained 1.5% in the past week or $1.60 to reach an oil price per barrel of $111.46.
Tensions from Iran escalated as sanctions from the West supported weekly prices despite Tehran’s continuous threats to block the Strait of Hormuz, the strategic route of 20% of the world’s oil supply.
Tom Weber, PFG Best’s Managing Director, has a neutral to bearish outlook on oil at present and keeps his tactic of shorting any beneficial rally. But, Shelley Goldberg, Roubini Global Economics’ Director for Global Resources and Commodities Strategy cautioned that a shock to the supply of oil will have damaging effects to the global economy and result to a terrible recession or depression.
She added that the crude oil price chart will be correlated to other high-risk asset classes, while having a short stand in crude has been a highly risky proposition. From a worldwide political point of view, Goldberg said that the present year will mark a separation of ties between countries and weakening global partnerships.