Oil prices saw very choppy action last week and ended up closing lower despite the Opec extending its output cuts for another nine months. The selloff was partly due to fact that the cuts were not deepened and partly because a 9-month extension was already factored in before the actual announcement. US rig count continued to increase and its oil production is now near the highest since August 2015.
We believe that rising US output will continue to cap prices this year but the Opec deal, for now, has ensured that WTI prices probably won’t fall below $45-47. This means that oil prices will broadly continue to swing between $45-55 for most part of 2017. Read more