Brent: Volatile path as Hormuz risk lingers – Commerzbank

Commerzbank’s Carsten Fritsch sees continued volatility in Brent as Strait of Hormuz negotiations remain unresolved and inventories tighten. Fritsch expects energy agency reports to support prices near term but project a significant decline once an agreement emerges, cutting their year-end Brent forecast to USD 75 per barrel from USD 80 previously.

Hormuz talks and low inventories

"Ultimately, everything remains up in the air and we think that it will still take some time until a final agreement is found. In our view, price fluctuations on the oil market are therefore likely to continue for a while. Once an agreement emerges towards the end of the year, however, the oil price is likely to fall significantly, as it did in the case of the recent hopes of an agreement."

"We have therefore revised down our price forecast for a barrel of Brent oil at year-end to USD 75 (previously: USD 80)."

"Next week, the three energy agencies will also take a look at developments on the physical oil market in their monthly reports, which should rather support prices."

"The shortfall is largest in US inventories of middle distillates: They are almost 12% below the usual level and are at their lowest for this time of year in 30 years."

"Nevertheless, any disruption is critical in an already tight market."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)