Oil prices stay volatile

Crude oil prices remain volatile but supply-side factors exert continued downward pressure.


WTI prices have fallen from about US$47 per barrel at the start of the month to around US$44.5 per barrel at the time of writing. Brent prices have fallen too.

Continued expansion by US drillers has continued to depress prices. According to Baker Hughes, US rig counts rose to 763 during the week of July 7, the highest year-to-date since April 2015.

Meanwhile, OPEC output has also rebounded slightly in recent weeks. The US Energy Information Administration (EIA) has, however, trimmed its forecast for US oil output in 2018 from 10.01 million barrels per day to 9.9 million.

“Higher US rig counts and OPEC output have continued to put downward pressure on prices.”


Some temporary support to prices has, however, come from an American Petroleum Institute (API) report. The report suggested that US crude inventories declined by 8.3 million barrels in the week to July 7, although they remain high in historical terms.

Markets continue to ignore recent geopolitical concerns in Qatar, where a blockade has been in place by other neighboring countries. Should concerns escalate, it is likely that prices rebound to closer to US$50 per barrel.

Further ahead, global demand (from improved world growth and a resilient China) remains supportive of prices above US$45 per barrel. But global supply and a rebound in USD strength will likely cap sustained gains closer to US$50 per barrel.

We expect WTI prices at US$50 per barrel on June 2018. Risks to our forecast include geopolitical concerns in Asia and the Middle East.




Source: Bloomberg Finance L P, Deutsche Bank Wealth Management. Data as of July 12, 2017.

Markus Müller
Head CIO Office 

Source: CIO Bulletin, July 14, 2017