Oil: Levels above $50 will be difficult to sustain - BNPP

Research Team at BNP Paribas, notes that the crude continues to extend gains this week, with the WTI front contract price nearly reaching $50/bbl for the first time since June.

Key Quotes

“Our commodity strategists have noted that levels above $50 will be difficult to sustain in the near-term, as this will invite levels of US production to continue at a pace inconsistent with rebalancing the market. Hence, with crude at the top end of its range, risk reward for CAD longs is looking increasingly unattractive.

Elsewhere in the commodity bloc, Australia’s trade deficit narrowed by more than expected in August. In Japan, weekly portfolio flow data showed domestic Japanese investors were net sellers of foreign securities last week. Japanese investor demand for foreign assets has slowed down considerably from the peak observed in late July.”