FxWirePro: Oil price likely to slide deeper towards $40 per barrel

In a review article named, “Oil in Global Economy Series: What's now for oil price amid OPEC/N-OPEC agreement?” available at http://www.econotimes.com/Oil-in-Global-Economy-Series-Whats-now-for-oil-price-amid-OPEC-N-OPEC-agreement-726976 , written in the aftermath of OPEC deal, we discussed how oil price was impacted by the famous ‘buy the rumor, sell the news’ trade after the deal was agreed upon by OPEC and participating 11 non-OPEC countries back in last month. Here are some lines from that article,

“While an agreement to extend supply cut is a positive fundamental development for the oil market, we suspect that the price may remain subdued despite the deal. There could be some buying after yesterday’s big selloffs (we are already noticing some), however, we suspect that the price would decline further towards $46.5 per barrel (WTI) in the short term before next major move. We would be closely monitoring price movement to understand the direction.”

Here, in this article, we would like to conclude that while oil price has almost reached our above mentioned $46.5 per barrel area, our analysis since the OPEC deal suggests that oil price is very much likely to decline further and we would like to stick to our April forecast, where we suggested that oil price (WTI) would decline towards $38 per barrel. We would like to add an interim target around $42 per barrel area.

WTI is curently trading at $47.3 per barrel and Brent at $2 per barrel premium to WTI.