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Oil Price Retreats Towards $55 on Monday as Forbes Predicts Another Year of Low Prices

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While oil prices have staged a slight fight back today with Brent crude futures gaining 0.45% by early morning in London, and WTI up 0.5%, Monday saw prices plummet by around 4%. Brent crude is currently trading at around $55.20 a barrel and WTI at $52.222. The market keeps swinging between optimism fueled by the majority of OPEC and the non-OPEC members who have agreed to cut production showing evidence of complying with commitments and doubt around the likes of Iraq reneging on the agreement. Increased production from exporters such as Libya, which are not part of the group that has agreed to cuts, is also weighing on the prospect of a real and sustained decline in inventories over 2017.

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Analysts are also conflicted. BMI Research recently stated, as reported by Reuters: “Coordinated output cuts will support the market rebalancing that will draw down global stock levels, leading us to revise up our Brent crude forecast for 2017 to $57 per barrel.”

However, evidence is mounting that hedge funds are losing faith in sustained prices of over $56 a barrel. Recent exchange and regulatory data show a marked slow down in long positions on oil price and gathering momentum for short positions. Other analysts are starting to make braver assertions that the rise in oil prices seen since December’s OPEC agreement will not last. The FT quotes SEB chief commodities analyst Bjarne Schieldrop as asserting “Brent crude (is) probably going to trade sub $54 a barrel”.

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