Oil Prices Near $75 Per Barrel: Citi Research Sees Buying Opportunity Despite Easing Geopolitical Tensions
In recent weeks, oil prices have experienced a slight decline, hovering around $75 per barrel. Citi Research, in a note dated Wednesday, sees this as a potential short-term buying opportunity, even as geopolitical tensions have eased. The brokerage has identified several factors that could lead to a rebound in oil prices, potentially reaching the $80s per barrel.
The recent drop in prices is largely attributed to geopolitical developments, particularly in Gaza, where a potential cease-fire is on the horizon, reducing immediate risks. Additionally, China's economic slowdown, marked by weakened industrial production, has contributed to a more cautious outlook on oil demand.
Despite these factors, Citi Research notes that geopolitical risks are still present. Weather-related disruptions during the hurricane season, along with ongoing tensions in North Africa and the Middle East, could provide support for oil prices in the near term.
The market's current positioning, which is historically short, also suggests a potential for a rebound, especially if Brent prices dip to the $75 per barrel level.
In the U.S., recent data from the Energy Information Administration (EIA) has been mixed but somewhat bullish for crude. Commercial crude oil inventories fell by 4.6 million barrels to 426 million barrels, exceeding expectations. Refinery runs increased slightly, with gross crude exports and imports rising.
Gasoline and distillate inventories experienced decreases, aligning with the broader trend of inventory draws. Despite these draws, jet fuel inventories rose slightly, and ethanol stocks increased.
Looking ahead, Citi Research suggests that OPEC+ may face tough decisions in the coming months. The group is expected to begin easing production cuts in October, but if Brent prices continue to decline, additional measures might be considered to stabilize the market.
In conclusion, potential buyers may find the current oil prices near $75 per barrel an attractive opportunity for investment. Despite recent declines, various geopolitical risks and market factors could lead to a rebound in oil prices. It is essential for investors to stay informed and monitor the market closely to capitalize on potential opportunities for financial gain.