As I indicated last week, oil prices are levelling off. The combination of inevitable profit-taking and indications that some OPEC members were once again ramping up production brought the week’s spike to a halt, with both main oil benchmark rates (WTI, set in New York, and Dated Brent, set in London) down slightly.
Nonetheless, both are up well over 20% for the month. WTI closed yesterday at $44.78 while Brent was at $45.81 (at 2:30 p.m. U.S. Eastern time, the close of oil trading in New York) – already above my call for a WTI pricing floor of $42-$45 a barrel by mid-June.
And while we’re now looking at a rather narrow price range in advance of the next meeting of global producers (to be held in early June in Moscow), a much bigger change is already rocking oil markets – whether a production freeze is agreed to next month or not.
You see, there’s a new “oil equilibrium” forming… and money is already moving in.
Now, I’m not talking about supply and demand here. In fact, that has little relevance today.