Crude oil Fair Drift Around $60/bbl This Year: Mark Keenan

Crude oil Fair Drift Around $60/bbl This Year: Mark Keenan

The crude oil is likely to remain volatile in the short term but from a long term perspective crude oil is likely to hover around USD 60/bbl by Q4 this year, Mark Keenan, Societe Generale said in an interview with CNBC-TV18.Oil prices slipped to a two-week low on Wednesday after a surprise build in US gasoline inventories and a rise in domestic crude output.US crude futures settled down USD 1.97 to USD 50.44 a barrel, a 3.8 percent drop, the biggest one-day decline since March 8. Brent crude settled down 3.6 percent, or USD 1.96 a barrel, to USD 52.93, said a report. US crude stocks fell 1 million barrels in the latest week.“The dynamic setting before the floor and ceiling in prices at the moment are linked to; a) OPEC cuts and the non-OPEC cuts which will put a solid floor to prices; and b) on the bearish side we have news about shale gas production coming back into the market,” he said.As the markets grapple with these dynamics, price of oil responds accordingly. The volatility will increase next week ahead of the OPEC meet scheduled for May 25. "Out general view is that cuts will be rolled over for the next year," said Keenan.In terms of direction, Keenan sees higher prices. “We see WTI averages USD 60.5 a barrel in Q4 this year and for Brent we see USD 62.5 a barrel. The challenge at the moment is to find compelling entry points for long-only perspective to capture the rise,” he said.Higher crude prices is unlikely to auger for macros as India imports some 80 percent of its crude needs. As long as crude prices stay below USD 60 a barrel, markets would not react much to the development in the long run.However, if crude oil crosses USD 60 a barrel, inflation will rise and most of the subsidy calculations as well as overall assumption in the Budget will come under strain.