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US crude is heading back into the mid-USD 50s – Mr Kilduff

Gasoil News - Published on Tue, 13 Feb 2018

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According to Mr John Kilduff, founding partner at energy hedge fund Again Capital, US crude oil is poised for a rapid decline into the mid-USD 50 per barrel range. US West Texas Intermediate crude fell below USD 61, nearly wiping out the year’s gains and extending an oil price rout into a fifth day. Rising US oil production and crude stockpiles, as well as a stock market sell-off, heaped pressure on oil prices this week. A stronger dollar has also been a prevailing factor the decline.

Mr Kilduff told CNBC’s “Squawk Box” “Crude oil prices have gotten knocked around by the dollar for the better part of two months now.”

He said that the inverse relationship between oil prices and the dollar — where one rises as the other falls — doesn’t always hold but has recently reasserted itself.

He added that “The dollar index got down to 86 [cents], crude got to USD 66. [The] dollar index is now back over 90, crude’s back down around USD 61, ready to break and I think fall back down into the mid-$50s here fairly rapidly.”

Early this year, Kilduff forecast that Brent crude would top USD 70 a barrel one week before it hit that level, ultimately stalling at USD 71.28. He projected US crude would break into the USD 65-USD 67 range three weeks before it hit a three-year high of USD 66.66.

Closely followed investor Leon Cooperman said U.S. crude could hit $70. Kilduff disagreed on Thursday, saying supply dynamics are still working against the oil market.

However, OPEC has successfully shrunk brimming crude stockpiles by partnering with Russia and other producers to limit supply, but Mr Kilduff says top exporter Saudi Arabia has carried most of the burden in that deal. And while the Saudis are cutting crude oil exports, producer nations are shipping out more refined products like gasoline.

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Posted By : Nanda Koijam on Tue, 13 Feb 2018
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