NEW YORK, January 29. /Corr. Igor Borisenko/. On the global oil market, the proposal still exceeds demand by about 1.5 million barrels per day, but this figure is gradually decreasing, which will lead in future to higher oil prices. This assessment was expressed on Thursday at a conference at the Center on global energy policy at Columbia University Seminskii Adam, the head of the energy information administration of the U.S. Department of energy. In his opinion, we can expect that “within a year” there will be a balancing of supply and demand on the world oil market.
The ability to reduce oil production by 5%, but it will be difficult to negotiate
On the situation on the market, he continued, now influenced by several factors, in particular, the cost of shale oil production in the United States. According to him, American companies engaged in the extraction of shale oil, “can survive only at a price not less than $50 per barrel”, and at current prices, about $30 per barrel, oil production in the U.S. declines by 1-2% per month. Only if the price will rise to $50-75 per barrel, he continued, the company will begin drilling new wells.
According to Adnan Shihab-Eldin, Director General Kuwait Foundation for advancement of science, we can expect that the price of a barrel of oil in the foreseeable future will amount to $50 and possibly $70. However, he emphasized that at low oil prices the countries-importers of energy carriers there is no incentive to switch from oil to other fuels, particularly coal.
Novak’s statement and the reaction of the oil market
On Thursday energy Minister Alexander Novak said he was ready to personally participate in the upcoming February meeting of OPEC and other oil producers. According to him, the subject of the forthcoming consultations would be to reduce production to 5% of each of the countries.
After this statement, the cost of futures for oil of mark Brent with delivery in March 2016 on the ICE stock exchange in London rose 5.7% to $35,01 a barrel, trading above $35 for the first time since January 6 of this year. After oil strengthened the ruble.
Dynamics of prices for oil since 1990 Dossier