Chris ‘Oil’ Williams, City Investor and City Financial Writer, takes a look at the oil market, the expectations for Iranian oil, OPEC supply concerns, key risk for the crude oil space, and a few oil stocks.
Brent crude closer to bottom
Brent crude oil looks like a contrarian buy, says Williams, as he believes that crude oil might be close to a bottom. On the worst case scenario, he sees downside potential to around $45/bbl. Commenting on the different between Brent and WTI, he also sees downside potential in WTI crude.
Vast difference in what Iran could deliver and what is expected
Williams believe that the Iran issues are already being priced in by the markets, and hence favours long positions on the oil market. There remains a mismatch between what Iran can deliver and the expectations for the same, he explains that the investors remain too bullish on Iranian oil which doesn’t mix well with the current infrastructure and potential.
OPEC nations reducing oil supply
Williams comments on the demand potential and the inconsistency in oil supply by taking a look at what’s happening in India, China – Increase in car sales, and Kurdistan, Libya, Tunisia and Venezuela – unstable environment resulting in inconsistency in supply.
Looking at OPEC nations, Williams sees most nations reducing their oil supply, not by choice, but due to maintenance issues which is restricting their ability to keep up the output pace.
December remains key for Oil prices
Highlighting the key risk ahead for Oil prices, Williams sees the December as the most important month when Saudi Arabia talks official policy.