Oil Futures Set To Rise, Barclays Capital Says

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By Terry Hughes

While NYMEX oil futures are trading in a fairly stable range at the front end of the curve, Barclays Capital observes that further along the curve prices have drifted considerably south and expects this to be reversed "before not too long."

The December 2012 NYMEX contract has fallen to US$63.42 recently, from May highs of over US$70/barrel, Barclays points out, and it is of the view that this does not "reflect a significant change in the dynamics that have seen the back end of the oil curve move steadily higher this year."

The analysts feel it is more likely as a result of an increase in producer selling and as such expect a move higher in the near future.

Positive newsflow in the Iranian nuclear saga may have also played a part, as could news that Iraq intends to reopen the Ceyhan oil pipeline to Turkey and news that the Thunder Horse and Atlantis oil fields are due to come on line in the second half of this year.

However, Barclays cautions that there is speculation that the two Gulf of Mexico projects may not start on time and that Iraqi pipeline restart is nothing significant with Iraqi production expected to remain "tilted in the direction of further losses."

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