Oil prices near bottom, and here is why it’s partly good news

Baku, Azerbaijan, Aug. 12

By Vagif Sharifov - Trend:

Oil prices have reach their lowest for the second time this year, and this is partly good news.

Currently, North Sea Brent oil is by only $2.40 per barrel more than this year's minimum price of $45.13 recorded in January, when the price for the first time reached bottom after starting to drop in September 2014.

At the time the market didn't allow any further decline below $45.13 per barrel, and after a week and a half, Brent's price was over $50.

The comfort market price seems to be $45.13 per barrel as coming down to it the price rises again.

And today, the oil price bottoming out is partly good news because it suggests a high probability of recurrence of the January situation when Brent went up.

If other conditions don't change, after August 20, prices can stabilize at a level above $50 per barrel.

Naturally, $50 per barrel is not the usual price when it was over $100 per barrel, but it seems such prices can be just forgotten for the next couple of years.

On the contrary, there are very pessimistic forecasts of $ 20 a barrel after the sanctions against Iran are lifted, but there are few such expectations.

On average, the most recent forecasts of the major international institutions come to $54-$57 per barrel for Brent in 2015 and $57-$61 in 2016. This fully reflects the current situation. A slight increase in prices in 2015 was caused, in particular, by slower growth in oil production in the US, than was previously forecasted, due to a decrease in investments in this sector. The EIA believes that the US will produce 8.96 million barrels of oil per day in 2016 or by 0.36 million less than was previously planned.

The combined world oil situation in 2015-2016 is as follows:

Edited by CN

Trend Oil Expert Vagif Sharifov

Follow him on Twitter: @VagifSharifov