Oct. 5 (UPI) — Crude oil prices stayed steady Friday after a volatile week that saw the highest prices in four years.
WTI crude was up 26 cents to $74.59 a barrel in mid-day trading while Brent was up 9 cents to trade at $84.67 a barrel.
“Fundamental dynamics have shifted in favor of the bears this week with a huge build in commercial crude oil stocks and news that Saudi Arabia and Russia made a private agreement weeks ago to increase output to help offset the declining exports from Iran,” said Tyler Richey, co-editor of the Stevens Report.
On Nov. 4, sanctions will go into effect that will prohibit countries from buying Iranian crude oil. The Trump administration wants to cut off money from the Iranian regime to pressure the leaders back into a new nuclear agreement.
Oil prices are up on the week overall despite a large build in crude oil prices.
“From a fundamentals standpoint, the threat of looming sanctions on Iran has been the only bullish influence this week,” Richey said.
While concerns about $100 a barrel oil have run rampant recently, Barclays takes a different approach in its latest prediction.
“The recent increase in prices has gone too far, in our view,” Barclays said in a note. “Although prices may continue to rise from current levels in October, the market is ripe for a correction.”
In the short-term, prices will go up but it won’t last, Barclays predicts.
“The rally could go even further this month, leading U.S. policymakers, consumers, OPEC and Saudi Arabia to react.”
The investment bank expects demand to soften as supply increases. That’s why Saudi Arabia has been hesitant to have OPEC and other big producers like Russia dramatically raise production.
Saudi Arabia could unilaterally increase production to offset Iranian crude.
“Key to the nature of this rally — as well as the outlook for prices in coming weeks–is both the uncertainty on the size and timing of the Iran production losses as well as the current divergence between physical and financial oil flows,” Goldman Sachs analysts said Thursday.