SEATTLE (Oil Monster): Citigroup's commodities team on Sunday said a "lower risk premium" on crude oilis likely in the wake of Israel's strikes Friday against Iranian military targets.
The bank cut its short-term Brent crude price target by $4 to $70/bbl and raised the probability of the base case scenario by 10% to 70%.
Citi also retained outlooks that could lead to an average Brent crude price target of $65/bbl in the first quarter, $60/bbl in the second quarter and $55/bbl in the fourth quarter.
The bank did not rule out a bullish scenario that would have Brent rising as high as $120/bbl, but put the odds of that happening at no more than 10%.
Citi's analysts did not offer any forecasts on how the conflict between Israel and Iran might play out, but many analysts believe the limited focus of attack and Israel's decision to spare Iran's energy infrastructure could ease tensions in the region.
The response in futures trading has been dramatic. The NYMEX December West Texas Intermediate contract fell to as low as $66.92/bbl, $4.86 below Friday's settlement. December Brent hit a morning low of $71.18/bbl, down $4.87/bbl from Friday.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
Courtesy: www.marketscreener.com