Beaten down oil prices caught a break in Thursday trading after a weak start to the session, with WTI trading up 0.56 percent to $42.76 by 1:00 p.m. London time and Brent 0.78 percent higher at $45.17. This follows a brutal month for the commodity which has seen both oil benchmarks drop by around 17 percent in the past month.
Yet recent trading patterns suggests traders have been trying to price the asset rather than push it down extensively, surmised Cameron Watt.
“My sense is that we’re probably in one of those $40 – $50 or $45-$55 ranging areas rather than we’re looking at something going down into the mid-$30s,” he said, adding “if that was wrong, there’d have to be a chronic increase in supply at a point of a very low price.”
Turning to broader market implications, oil’s weak recent trajectory and outlook is not incompatible with an optimistic view on stocks, Beat Wittmann, partner at Porta Advisors, told CNBC’s Squawk Box on Thursday.
“Net-net lower prices are positive for G-7 countries and certainly for emerging markets where it’s an important input factor…It takes off some pressure, of course, from interest rates and inflation rates as well, so I don’t see that as negative as long as we don’t go really much lower,” said Wittmann.
“Low oil prices – as long as we have orderly markets – is quite positive,” he concluded.
