Oversold bounce won’t last, softer oil prices ahead: Peter McGuire

The global oil market is back in focus as OPEC+ announced a fresh output hike, triggering speculation about Brent crude’s price trajectory. While prices showed an early spike on Monday morning, experts believe the trend may not sustain for long.

Peter McGuire, CEO of XM Australia, shared his perspective on the latest developments. “I noticed that Mr. Novak, who was the Russian oil minister a few years back and was certainly very vocal, is saying that Russia will be fully compliant with OPEC+ commitments. So, here is the first part of it. They naturally want to see an increase in production. The OPEC+ group of eight members called for a 137,000-barrel target hike, and I feel as though this is going to work through the market and possibly unwind those October 2023 cuts. I think you are going to see a glut in the market sometime around mid-Q4,” McGuire said in an interview with ET Now.

The announcement coincided with Brent crude registering a gap-up of over 1% in early trade. But McGuire noted that the jump may not be indicative of a sustained rally. “Yes, certainly. It is in that downdraft. I feel as though it was probably oversold when it came into what we saw on Friday, and we saw WTI and Brent certainly pushed down hard. So, this is probably a little bit of oversold movement, a bounce to the upside in Asia trade this morning—and that is not unusual,” he explained.

Looking ahead, McGuire expects softer pricing rather than a prolonged surge. “I feel the overall theme is going to be one of softer pricing, and I would not be surprised to see it in the mid to high 50s. I would lean more toward the high 50s, probably within another month to month-and-a-half. That would be a solid improvement for consumers as far as price, and that is something everyone is going to welcome with open arms,” he added.

With OPEC+ aiming to balance supply and Russia reaffirming its commitment, the coming weeks will reveal whether Brent stabilizes at higher levels or edges lower, potentially easing inflationary pressures for energy-importing nations.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)