Brent Could Slide When Buzzard Oil Field Resumes Output
Brent Crude Oil traded at 112.85 on Friday morning, a small decline from Thursday's prices. The commodity has held around $113 per barrel over the past week amid rising tension in the Middle East and increased optimism about the global economy.
The European Union and U.S. remain locked in a tense stalemate with Iran over the development of nuclear technology. On Tuesday, new sanctions were added to Iran's oil and banking sector in order to convince Iranian officials to cut its nuclear program. However, reports from the West claim Iran has done just the opposite and made advancements to its uranium enrichment program.
This week also brought about news of increased investor sentiment in the eurozone as Spain moved closer to a bailout request. The region seems to be recovering, and many are predicting that the worst is over. The optimism in Europe coupled with improved US data eased investors' minds a bit about future oil demand waning in the face of weaker economies.
Friday's slight dip could be the beginning of a price slide for Brent, though. Reuters reported on Friday that Buzzard, Britain's largest oil field is set to restart this weekend. The oil field underwent maintenance in September and decreased the oil supply from the North Sea, providing support to Brent prices.
With the oil field up and running on October 21st, many analysts predict that the demand for crude oil isn't strong enough to offset a sudden increase in supply.
With little more than renewed optimism and speculation within the eurozone to increase global demand, Brent crude could face a massive slide. Supply seems to more than meet demand, and barring an extreme geopolitical event, a lacking demand could push priced downward.
On Thursday, Goldman Sachs predicted Brent to trade at $110 per barrel in 2013, down quite a bit from its earlier forecast of $130 per barrel.
© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.