New York-traded oil futures ended lower Monday after shifting between gains and losses in the wake of an election win by Greek antiausterity party Syriza. Light, sweet crude for March delivery fell 44 cents, or 1%, to close at $45.15 a barrel on the New York Mercantile Exchange. Brent crude also declined, with the March contract declining 63 cents, or 1.3%, to $48.16 a barrel on London’s ICE Futures Exchange. T
While the U.S. dollar and dollar-denominated crude-oil futures often move inversely, both began to lose ground early Monday just as news broke that Greece’s Syriza party was projected to have won the general election there. While Syriza had been expected to garner a plurality of the vote, the margin of victory was larger than poll results published Friday by Reuters. Following reports of the outcome — which raised concerns that Greece could break the conditions of its international assistance and perhaps even leave the eurozone — Nymex’s crude dropped to its lowest point in the session. WTI futures on Friday fell 1.6% during the regular New York Mercantile Exchange session. Brent crude on Friday declined 0.6%.
Earlier Monday, the Organization of the Petroleum Exporting Countries’ Secretary-General Abdalla el-Badri said oil at $200 a barrel would be possible if producers don’t invest in new supply. Prices between $45 a barrel and $55 a barrel are likely the bottom, with a rebound likely “very soon,” he said, according to Reuters. Oil caught some tailwind from Badri’s comments although the “his broader remarks also included a mention of the current (1.5 million barrels a day) supply/demand surplus,” said Tim Evans, an analyst with Citi Futures. The longer-term risk that lack of investment could send prices to $200 per barrel are likely “a hypothetical scenario at this point,” Evans said. “Particularly given the shorter lead times for shale oil investment, we think there would be quite a bit of supply available at significantly lower levels. And in the near term, the supply/demand surplus remains a cap on prices in our view.”