Global Energy Studies Centre expects drop in oil prices

Oil&Gas Materials 22 January 2013 16:29 (UTC +04:00)

Azerbaijan, Baku, Jan. 22 / Trend A.Badalova/

Global Energy Studies Centre (CGES) predicts gradual drop from the current level in oil prices.

"Lower than previously forecast global economic activity, combined with rapidly rising non-OPEC output, will lead to a gradual erosion of oil prices from their present level," CGES analysts' report said.

Analysts' reference scenario is based on a nominal decrease in OPEC basket prices from $109.5 per barrel in 2012 to $92 per barrel in 2016.

Following the auction on January 21, the price on Brent futures for March decreased by $0.18 a barrel to $111.71 per barrel. The cost of WTI futures on the New York Mercantile Exchange decreased by $0.09 to $95.47 per barrel in March. OPEC basket price amounted to $109.32 per barrel, which is the highest level since October, 2012.

Analysts believe that geopolitical tensions may arrest the downward trend in oil prices, however, even if they arise, their effect will likely be short lived.

"The underlying trends of lower economic growth and rising crude supplies are stronger and they will most probably defuse any upward pressure on oil prices - except of course if a major crisis erupts in the Middle East or other major oil-producing region," analysts' report said.