Oil prices traded lower in the early European session following the longest positive streak of the year for the commodity as analysts remained divided on where the price will head from here.
Brent had slipped back to trade at $55.87 at 10am London time after Monday's close cemented a six-day streak which saw prices up a cumulative 6 percent. Meanwhile, WTI was hovering a quarter of a percent lower for the session at $52.93, after notching up a fifth positive close for cumulative gains of 5.7 percent. So far in 2017, Brent is trading around 1.5 percent lower to Monday's close while WTI has lost 1.3 percent this year over the same period.
Among the bears, Stephen Jones, chief investment officer (CIO) at Kames Capital says that oil prices are unlikely to rebound significantly from here given a supply glut and increasingly sophisticated oil extraction methods.
Noting that spiking inventories and a big pullback in hedge funds' bullish bets are seen by many as short-term factors set to unwind, Jones says instead that the drastic reshaping of both supply and dynamics that has taken place will limit potential oil price rises.
"Having been through their own recession, U.S. exploration and production companies – and those focused on shale – are now able to operate in a lower oil price environment," said Jones, in a note to clients on Monday.
"That means the structural price of being able to get new oil supplies out of the ground has fallen, mainly thanks to significant improvements in the technical ability to produce oil, and therefore the price will remain lower than most people think," added the CIO of the British investment management business.
Turning to demand, currently registering 97.89 million barrels a day, Jones notes that it is failing to keep up with supply levels of 98.29 million barrels a day.