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OPEC and Russia Aiming for $50-60 Oil Price to Prevent Shale Comeback

Russia and Middle Eastern oil producers want to keep oil prices between $50 and $60 per barrel, according to the head of commodities at RBC Capital Markets, who suggested that U.S. supply is the real problem for the oil cartel.

Supported by a drop in U.S. fuel inventories, oil climbed further above $52 per barrel Friday amid plans from OPEC producers for a supply freeze agreement to help stabilize prices.

“I think that Saudi Arabia, OPEC and the Russians hope that yes some U.S. production will come back but $50 to $60 is probably not enough to resurrect the entire U.S. shale complex,” Helima Croft, managing director and global head of commodity strategy at RBC Capital Markets, told CNBC Friday.

“I don’t think they are aiming for $70 to $80, because I don’t think they want to bring it all back,” she said. Croft added that Russia and the Middle East want a “steady grind higher, not a gallop” in terms of prices.

In their most recent note RBC capital markets see WTI and Brent averaging $51 per barrel and $53 per barrel over the rest of 2016, before increasing to $56.50 per barrel and $59 per barrel on average in 2017.

via CNBC [1]

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Alfonso Esparza

Alfonso Esparza [6]

Senior Currency Analyst at Market Pulse [7]
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza
Alfonso Esparza

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