Oil prices (CL=F, BZ=F) are rising on Monday as Middle East tensions escalate following an Israeli strike on Hezbollah in Lebanon over the weekend. Also driving prices is Libya’s decision to halt oil exports. Path Trading Partners’ Bob Iaccino joins the Morning Brief to discuss the outlook for the oil market.
Iaccino argues that “supply and demand is widely balanced” given that oil prices have been stuck in a trading range. He notes that demand fears are “really entrenched in the market right now,” and inventories are high, suggesting that “there actually has to be a disruption” to supply to significantly alter the current trajectory.
“My overall stance on crude oil is that demand fears are just too great at this point. And when you look at what’s going on with the Fed and how they’re about to start rate cuts, that doesn’t necessarily lend to a picture of stronger demand in the short term,” Iaccino explains.
Regarding OPEC’s potential shift in oil production outlook, Iaccino believes the organization is “stuck between a rock and a hard place.” He points out that since cutting production, they’ve continued to lose market share to non-OPEC producers. However, he notes, “they can’t cut production while prices are falling because it won’t work,” due to other producers picking up the slack.
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