Crude oil seems to be making a comeback. With prices rebounding significantly over the last few weeks, traders are jumping back in with expectations of continued gains.
Although Brent is off by nearly 40 percent year to date, traders are hoping for some small gains throughout the summer and into the rest of the year.
"I'm looking for it to trade $65, $70 by the Fourth of July, and I don't think the market gets much above that," said NYMEX-based energy trader Anthony Grisanti. Grisanti believes that summer demand for oil products will drive the commodity higher.
Most investors agree. Brian Stutland, another Chicago-based trader, notes that there is “a bull pattern in oil, but I think $65 to the upper 60s range is probably the top" That price will send suppliers "coming back in and flooding the market. So there's a lot of overhang at that level, and I'd be a seller up there," Stutland added.
U.S. Production Peaking
In the meantime, crude oil prices were broadly unchanged in early trading on Tuesday but analysts said there were signs that a recent rally was running out of steam. Front-month Brent crude prices were up 6 cents to $65.58 per barrel by 0120 GMT. U.S. crude prices were up 16 cents at $59.88 a barrel.
Some analysts see prices starting to drop again pointing to the rate of U.S. production reaching its peak, albeit temporarily. While others believe that big price jumps in either direction are unlikely.
"Crude oil markets were supported by a reported decline in U.S. production and crude oil inventories last week but prices failed to re-test the highs set earlier in the month," ANZ bank said in a note on Tuesday.