Crude oil vulnerable above $70

25/08/2009

Although crude is currently trading at $74 (£45) a barrel, the commodity will remain vulnerable to downward movements at any price above $70, one analyst has claimed.

Victor Shum, a senior energy analyst at Singapore-based firm Purvin & Gertz, said that while commodities such as crude and heating oil have risen on the back of improved macroeconomic prospects in recent sessions, petroleum products are still exposed to demand risks.

"Oil at the $70-plus level remains potentially vulnerable because there is little constructive fundamental support, inventories are high and global demand remains weak," he commented.

He added that demand for crude also typically undergoes a seasonal dip in demand during autumn before picking up again in winter as sales of heating oil and other products pick up.

Last autumn, this price slump was particularly acute as the collapse of Lehman Brothers and the onset of the financial crisis caused a demand for crude to plummet.