There would be a downward pressure on oil prices again, Vandana Hari

There would be a downward pressure on oil prices again, Vandana Hari, , Asian News Director, Platt's


Tell us prices are still hovering around $80 where do you see them from here on in 2010?

Vandana Hari: In the short term they are going to remains supported there is a cold wave seeping across east coast of US and refinery runs are very low stocks overall they are still at high but they are depleting very fast. Going into 2010 the first quarter I think short term prices will tend to follow the severity or otherwise off winter but eyes specially being on distillate stocks and heaping oil stocks in the US because that’s the product that gets consumed the most.

Some statistics that came out overnight the weekly statistics in the US showed that there has been a larger than expected drop about 3.5 billion barrels in metals so that what supporting the market. I imagine going forward in the winter it will remains the same. Longer term oil prices are going to be tide and hit with the economic fortune and with the strength of the dollar.

And when you look at inventories they have clearly dropped right now because of the winter demand so is it seasonality play that coming into the picture right now you feel that inventories have clearly peaked out current levels and 2010 would see low and lower levels?

Vandana Hari: Yeah that seems to be the fear right now though if you look at metal distillate in the US even after the latest weekly drop they are still sitting like 26 to 32 million barrels above the one and five year averages respectively so there is a great deal of comfort cushion there but you will see a knee-jerk reaction in the market because crude imports are going down, the refineries are not churning out enough so in such a scenario if the cold waves continues and oil stock continue depleting there will be a support there definitely.

Well that’s quite a valid point that you raised but what is the range that you see crude is likely to hover between in 2010?

Vandana Hari: I would not want to put an estimate as that not what we do at Platt’s, I would not want to give any range as such but if you look what has been happening in the recent weeks and if you look at opex actions as well, opex crude output cuts have also gone a long way this year in supporting oil prices at their current levels opex seems to be poised to move if it moves out of the current band in other words the organisation wants to support prices ideal range at 75 to 80 and would probably move to cut some more or if they go down so I would say that somewhere in 70 to 80 a lot will depend on to what extent the inventory is get drown down. So when we come into the second quarter which is a lower demand season and the inventories are not down I would say there would be a downward pressure on prices again.