A veteran oil expert says benchmark crude prices are likely to remain within a tight range for the foreseeable future as tariff uncertainty continues to rattle global markets.
“I think that oil prices are going to continue to remain under pressure,” Andrew Lipow, president of Lipow Oil Associates, told BNN Bloomberg in a Wednesday interview.
“Brent (crude) I think is going to remain stuck in a range between US$70 and $75 a barrel over the next six months certainly given the dynamics that we’re seeing on the supply side.”
The price of West Texas Intermediate (WTI) oil was up less than one per cent on Wednesday afternoon, hovering below US$70 per barrel following the release of government data a day earlier that showed crude and fuel inventories fell faster than expected last week.
But Lipow noted the longer-term trend shows inventories rising worldwide.
“We have seen over the last several months crude oil inventories increase in the U.S. at the same time that strategic petroleum reserve filling has been continuing,” he said.
Lipow said that the threat from U.S. President Donald Trump’s administration to impose tariffs on buyers of Venezuelan oil, as well as tighter sanctions on Iran’s oil exports will be important developments to watch going forward, as both nations sell more oil to China than anywhere else.
“What I do wonder about is whether Venezuela and Iran will discount their oil sufficiently such that Chinese independent refiners are willing to take the risk to circumvent sanctions,” he said.
“Because so much money will be on the table due to discounted pricing of oil.”
Canadian energy
At a time when energy infrastructure is top of mind for many Canadians given the ongoing national conversation around self-sufficiency amid a trade war with the U.S., Lipow said Canada needs more pipelines to gain access to global oil markets.
“Certainly, Canada needs more infrastructure to access Atlantic basin and Pacific basin markets through pipelines and that’s why you’re hearing talk about reviving the Northern Gateway pipeline going to the west coast as well as the Energy Easy pipeline to the east coast of Canada,” he said.
“Because clearly Canada is very dependent on the U.S. through all the pipelines going to the mid continent supplying about 2.9 million barrels a day of oil.”
