Oil Prices Likely to Stay High: Analysts
The start of hurricane and driving season in the U.S., coupled with instability in Nigeria and fuel stockpiling for winter will likely keep the crude price from falling, analysts told CNBC on Wednesday.
"Unless we have a major recession, which is not on the table at the moment … it's very difficult to see how prices would sharply drop from where we are now," Walid Kurdi, European oil editor from Platt's, told "Worldwide Exchange."
And even factors that could potentially ease the rally are flawed, according to analysts.
Saudi Arabia's oil output rise isn't going to solve the current problems because the Middle Eastern country is only offering heavy oil, which is less in demand, Stephen Pope, chief global market strategist from Cantor Fitzgerald Europe, told CNBC.
Also a recent U.S. Democratic proposal to add on a windfall profits tax to oil companies to ease the burden on consumers will have an adverse effect because the profits should be ploughed back into "search and seek expeditions to find new resources that we can exploit and use," Pope said.
A lack of investment in oil exploration and new excavation projects could bump up the oil price further in the long term, he added.
Claims that oil prices have been pushed higher by speculators are overblown, because the volatility is actually dictated by tight supply, Kurdi said.
But any dips in commodities, mining or agrochemical stocks could provide a chance to step back into the market and buy, Pope said.
"Look for areas where there is some pricing power … I still think the steel companies where they own their own iron ore is very good," Pope added. "I'm particularly interested in something like Nestle … they are passing on prices."