Sept. 11 (UPI) -- Because of the conflicting forces at play for crude oil prices, the trend is sluggish and the forecast for major benchmarks is lower, RBC Capital Markets said.
The price for Brent crude oil is, at about $53.50 per barrel early Monday, about $6 per barrel higher than this time last year, but still about $40 less than it was three years ago. A plan implemented by the Organization of Petroleum Exporting Countries in January to erase the surplus on the five-year average for global crude oil inventories through managed production declines helped put a floor under crude oil prices, but it's a shaky one.
"Signs of improving market fundamentals have become increasingly apparent, but sentiment remains polarized," a research note emailed from RBC Capital Markets read.
OPEC members Libya and Nigeria are exempt from the agreement so they can steer oil revenue toward national security efforts. According to the latest estimate from commodity pricing group S&P Global Platts, production in August from both countries combined was about a half million barrels per day above the level from October, the month used by OPEC as a peg to gauge cuts and quotas.
Meanwhile, U.S. oil production from shale basins has become more efficient and therefore more resilient to a weaker market than expected. Last week, Bill Barrett Corp., which has a strong focus in Colorado shale, said it expected to produce between 6.4 million and 6.6 million barrels of oil equivalent this year, a 4 percent increase from its previous estimate and 12 percent higher than last year.
The U.S. Energy Information Administration said the four week average for total crude oil production of 9.3 million barrels per day as of Sept. 1 was 9.5 percent higher than last year. Total crude oil inventories in the United States, however, have moved steadily lower and helped drain the surplus on the five-year average.
"Investors impatiently wait for global inventories to return to the seasonal balance, but the market has seemingly found a provisional state of symmetry," RBC's report read. "A cautious price path forward is paramount in the elusive pursuit of equilibrium."
RBC said it expected the price for West Texas Intermediate, the U.S. benchmark for the price of crude oil, would be around $49.30 per barrel for the year, about $1.50 higher than the level early Monday. Brent is expected to average $52.50 per barrel for the year. The RBC estimate for both bencharmks is a downward revision of $3.50 per barrel.
In its forecast from Aug. 8, the U.S. EIA said it expected Brent to hold a $2 premium over WTI for the year at $51 per barrel. The EIA's next short-term market report is due out Tuesday.