Oil Steadies Around $70, Further Fall Possible

Brent crude oil steadied around $70 a barrel on Thursday as investors searched for a stable price range after a near 40 per cent fall since June.

Oil has been volatile since the Organization of the Petroleum Exporting Countries (OPEC) said last week it would not lower output despite an oversupplied market.

Brent was up 26 cents at $70.18 a barrel by 1040 GMT. U.S. crude rose 12 cents to $67.50 a barrel, after a 50-cent gain in the previous session.

“If you look at what has happened in the last few days, we seem to be sitting around $70 a barrel,” said Olivier Jakob, oil analyst at Petromatrix in Zug, Switzerland. “Crude is now hesitating, trying to find that next 10-dollar range.”

Brent hit a five-year low below $68 a barrel on Monday after averaging around $110 a barrel in 2011 to 2013.

Some analysts expect prices to fall further after bearish comments from key OPEC members.

The Wall Street Journal, citing people familiar with the situation, reported on Wednesday that the cartel’s largest exporter and producer, Saudi Arabia, now believes oil prices could stabilise at around $60 a barrel.

But poorer OPEC members are not happy.

Venezuela’s President Nicolas Maduro said the “fair price” for oil was around $100 a barrel even though it could fall further in coming days.

Nigeria has lowered its oil price budget assumption by 11 per cent to $65 a barrel in its 2015 budget, from $73 a barrel, a Finance Ministry spokeswoman said on Thursday.

Jakob said Saudi Arabia was targeting a $60 to $70 price range and the Kingdom hoped a fall below $60 would be brief.

“There is a very real danger of the downtrend re-asserting itself,” said Robin Bieber, director and technical analyst at brokerage PVM Oil Associates. “Treat the market with maximum care and keep exposure limited until the next leg is clear.”

U.S. crude inventories fell by 3.7 million barrels last week, compared with analysts’ expectations for an increase of 1.3 million barrels, data from the Energy Information Administration (EIA) showed on Wednesday.

Crude stocks at the Cushing, Oklahoma, delivery hub fell by 694,000 barrels, the EIA said.

This helped narrow the spread between Brent and West Texas Intermediate to less than $3 a barrel on Wednesday, the weakest in seven weeks.