Analysts see more downside on oil futures

Oil futures bounced back after the previous day’s sharp falls but analysts warned there might be some more downside still to come.

Francisco Blanch, head of commodities and derivatives research at Bank of America-Merrill Lynch sees West Texas and Brent oil futures heading lower to $50 and mid-$50 a barrel on the combined pressures from a possible nuclear deal with Iran, rising US interest rates and worries over Greece.

China is not the main story however, Blanch told Bloomberg News TV.

Oil producers need to hedge oil prices for 2016 is also a factor - about 1bn barrels need to be hedged in North America alone.

On top of that, this time around many oil majors are going in very leveraged, so their need to hedge is even greater, Blanch explained.

Another factor to keep in mind is that the 4 July weekend Stateside marks the entry into a period of seasonally weaker demand for gasoline.

As of 13:40 front month Brent crude futures were 0.89% higher to stand at $57.05 per barrel out on the ICE. In parallel, prompt month futures for West Texas Intermediate were edging higher by 0.08% to reach $52.58 out on NYMEX.