Crude Price Trends - Deciphering The Indecipherable: ICICI Securities

ICICI Securities Report

Recent trends in benchmark crude prices have been perplexing, to say the least. Sustained strength in economic data from the U.S., a slow but gradual recovery in European economic growth, and aggressive sustenance of supply cuts from OPEC+ have been counteracted by weak inventory data from the U.S. in conjunction with an uncertainty on the pace and direction of demand from China.

We believe the pessimism is overdone and enough signals are ploughing on in demand pointing to higher prices over the medium term.

Low inventories, persistent low investment in upstream due to regulatory and policy pressure, and supply cuts will likely egg supply deficits over the next five years.

Indian oil and gas companies see material benefits of moderate prices, but we do see prices rising to $85-90/barrel of oil gradually.

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