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Oil to Rise This Week as Risk Aversion Fades: Survey

Five out of 11 respondents polled by CNBC expect higher oil prices this week as risk aversion fades on the perception that Greece may start to overcome the worst of its debt problems after the E.U. orders it to take steps to cut its deficit in 30 days.

"Prices have recovered nicely from recent falls, which demonstrates that a broad US$75-US$85 price band remains firmly in place," said Gavin Wendt, Senior Resource Analyst, Mine Life.

off shore oil rig
off shore oil rig

"Prices have recovered nicely from recent falls, which demonstrates that a broad US$75-US$85 price band remains firmly in place," said Gavin Wendt, Senior Resource Analyst, Mine Life.

"Crude is nicely protected by bargain-hunters when the price falls below this pricing band, as markets know how quickly geopolitical factors in a place like Iran can impact crude oil supplies," he said.

Eurozone Debt Eyed

Four respondents were bearish while two were neutral. Market participants remained concerned about rising volatility especially if Eurozone debt problems persist, sending investors into the relative safety of the U.S. dollar.

"Given that we are in the middle of the Greek story right now I think that will be the driver as opposed to the fundamentals which given the weather, some draw down (in fuel inventories) seems reasonable," said Roger Nusbaum, Chief Investment Officer, Your Source Financial.

"As the Greek story is in uncharted waters I think risk aversion wins out over risk seeking and the price drops," he added.

Meanwhile, weather-related delays to imports into the U.S. may offer some near-term support to prices while Iran tensions and the threat of additional sanctions against the oil producer may bolster the risk premium in the price of oil.

These were some of the neutral responses:

Rachel Ziemba, Senior Research Analyst, China and Oil Exporting Economies, Roubini Global Economics:


"Assuming the EU continues to blink in the game of chicken with Greece. I still think global risk and market forces will be the most significant drivers of oil prices.

"The storm should whittle away some inventories (in the U.S.) but that will should be quite local. It might help but the overall macro trends will be a restraint."

Mike Sander, Sander Capital Advisors:


"If Greece was leaning further along to a default then we would have seen oil break $70 for sure. Now it looks like the Euro-Zone is going to stay together some how.

"With stability coming back to the market place we have seen the Dow Jones index rally above 10,000 and oil back above $75, both signs of a positive and strong market.


"For now something very bad would have to occur to push oil below $70. I am not sure what that would be, but for now the market looks to remain in a range between $78 and $73."

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