Brent crude oil steadied below $73 a barrel yesterday, holding onto a rally from five-year lows after oil producers failed to curb production despite a supply glut.
“The market is trying to find some equilibrium,” said Olivier Jakob, oil analyst at Petromatrix in Zug, Switzerland.
“There was a sharp drop last week and a rebound on Monday. Brent is trying to find out if it is going to be trading at the $60 to $70 range or $70 to $80.”
Both Brent and US crude touched five-year lows on Monday, with Brent dipping to $67.53 a barrel and WTI touching $63.72, before recovering to settle up on the day.
IMF welcomes lower oil prices
Falling oil prices are positive for the global economy as a whole, though they may hurt individual commodity exporters, IMF Managing Director Christine Lagarde said on Monday.
“Assuming we have a 30% decline (in oil prices), it’s likely to be an additional 0.8% (in economic growth) for most advanced economies, because all of them are importers of oil,”
Lagarde said, mentioning the United States, Europe, Japan and China in particular.
World oil prices are down 40% since June, largely on abundant supply. OPEC also declined last week to cut production to bolster prices, sending Brent crude prices to a five-year low this week.
But Lagarde warned falling crude prices were hitting some oil exporters particularly hard, especially Russia, Iran, Venezuela and Nigeria, leaving their economies vulnerable.
“All countries that will be affected significantly by the decline in the oil price, which are producers of oil, I think should be under watch,” Lagarde said at a Wall Street Journal conference. “Venezuela is clearly one ... where it could be difficult.”
The South American member of OPEC derives 96% of its export revenues from oil, so the drop in
prices has hit exacerbated a national economic decline, a foreign currency shortage and a scarcity of basic goods.