Benchmark Brent crude oil prices may test $110 a barrel this week, extending last week's rally to fresh multi-month highs amid lingering fears of Middle East supply disruptions and expectations of improving U.S. demand after forecast-beating jobs data, according to CNBC's latest survey of oil market sentiment.
Still, the risk of a correction lower in oil prices is getting stronger. A minority of respondents in this week's survey warned last week's 5 percent rally in Brent and 6.7 percent jump in U.S. crude futures seems over-extended and doesn't reflect still subdued fundamentals of only modestly improving demand. The U.S. fuel stockpiles - although in seasonal decline – are also above the upper limit of the average range for this time of year, they added.
Almost three-quarters of respondents polled, or eight out of 11 (about 73 percent), said prices will rise this week while the remaining three, or about 27 percent, said a correction is due.
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"I expect that the run-up is almost over," said Mark Waggoner, President of Excel Futures in Bend, Oregon. "Look for WTI (West Texas Intermediate, the crude grade underlying U.S. futures) to break back below $100 next week. Demand is still not as high as it could be. The push to fill retail outlets should be done now (ahead of the high-demand U.S. summer driving season, which runs from runs from around late May to early September)."
Gasoline is likely to lead the broader energy complex lower, Waggoner added, on expectations "stockpiles will jump because utilization is so high. Look for a major drop in next 30 days."