In the coming months the situation with oil prices will be highly unstable, since the problems provoked by “herd instinct”, but in the future, players can expect higher prices on the black fuel, says Forbes columnist Gaurav Sharma.
MOSCOW, 23 Dec –. Oil prices are likely to rise to 50 dollars per barrel by the fourth quarter of 2016, because the fundamentals of the market did not suffer, writes the analyst in the oil and gas sector, Forbes columnist Gaurav Sharma.
Recent oil price decreases, then slightly increases, which leads to a 5-6 percentage losses as well as gains for market players in one day. Oil prices brands Brent and WTI broke the 12-year record and now fluctuate at the level of 30 dollars per barrel. By the end of 2015 the price of oil fell by 36% compared with 2014, and now the prices fall to 20 dollars per barrel does not seem so unreal, reminds the analyst.
Although volatile oil prices in the coming months is inevitable, it should be borne in mind that the fundamentals of the oil market have not changed significantly. Many fear the planned Iranian oil supplies amid the market saturation. Iran in the coming year will not be able to achieve production of 500 barrels of oil per day, as planned. Very good cards in the next 12 to 15 months he will be able to produce only 400 barrels a day. The volume of oil production by countries outside OPEC, and the United States may be reduced, says the observer.
For many countries outside OPEC’s optimal oil price is average $ 60 per barrel. When prices collapsed to 50 dollars, many States still continued to hold on, but with the price of $ 30 they will not be able to cope. This cost hurts even by producers in the middle East, although there the cost of oil production is much lower than in other regions. Oil producers in the US also scratching their heads over what to do with oil prices. It is already clear that the adjustment of output is inevitable and the need for it will only grow, said in the article.
According to Gaurava Sharma, the growth of oil production in Iran and its decline in the United States will cancel each other out and the market will not suffer from over-saturation. In addition, the expectations of the analyst, Asian markets, including China, in 2016 will continue to grow, though not as fast as before, but fuel demand will increase. Global oil demand in 2016 will probably comprise of 96.5 million barrels per day, according to the International energy Agency (IEA), which will be 1.2 million barrels to exceed last year’s figures. Thus, the current glut in the oil market in a favorable way will coincide with increasing demand, says analyst.
“When the bloody war will cease from June onwards, the oil price will rise to $ 50 per barrel. The growth will be gradual…” writes Gaurav Sharma.
Today, the instability in the oil market is not justified on any economic reality or the fundamentals of supply and demand in the oil market, says the analyst. Of course, for oil producers current conditions are horrible, but they are justified primarily on the “herd instinct”, focused on reducing supply and demand. In 2016, the market should stabilize, although in the coming months the situation will be extremely confusing, predicts Gaurav Sharma.