Crude Oil Could Remain Near $60 For The Remainder Of The Year

Brent crude oil looked set to finish the week on a bright note as trading resumed following the Christmas holidays. The commodity traded at $62.10 at 9:00 GMT as investors saw some hope in robust U.S. data.

Data out this week showed that the U.S. economy was on solid ground, a good sign for demand. The nation’s economy grew 5 percent in the third quarter, while labor market data showed that jobless claims had fallen by 9,000 last week. With the world’s No. 1 oil-consuming nation on track to continue a strong recovery, demand is likely to increase, but not enough to offset the growing supply glut.

Reuters reported that U.S. crude inventories increased by 7.3 million, the nation’s highest ever inventory level in December. The figure was also far above analysts’ expectations of a draw, suggesting that the global supply glut was continuing to expand.

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Japanese data also weighed on prices as the nation’s import data disappointed. Japanese crude imports fell 17.3 percent annually in November, a bad sign for the commodity.

Moving forward traders will be increasingly cautious as oil prices have been quite volatile since November, when OPEC decided against a supply cut. Investors are now waiting to see if $60 is the bottom for the commodity after weeks of decline.

At present, there looks to be no sign of a catalyst for oil prices that will outweigh current oversupply worries. Most believe that crude prices will remain low until producing nations cut back on their output, but with OPEC sticking to its decision to maintain output and U.S. law barring companies from making a collective cut, Brent will likely continue to trade near $60.