Baku, Azerbaijan, Apr. 21
By Elena Kosolapova - Trend:
Oil prices are going to increase, but then they will go down again, professor of economics in the US National Defense University, Adjunct Professor in Georgetown University Paul J. Sullivan believes.
"Oil supply and demand will change. Prices will go up," Sullivan told Trend.
The expert noted that the US increased oil production since 2010 by 4.5 million barrels a day and the US oil production increases were the key to the drop in the price of oil since 2014. Moreover, the slow down in the world economy, and especially China added to pressures on the price of oil, he said.
However, rig counts are way down in the US, and the US oil production is flattening and is expected to drop, according to Sullivan.
"Oil stocks are wearing down. Excess oil on the market it not what it was. Oil markets are beginning to tighten," the expert said.
Sullivan noted that world oil demand is already getting closer to world oil supply, what will lead to increase of oil prices.
According to the April outlook of the US Energy Information Administration (EIA), the global oil supplies are expected to reach 96.27 million barrels of oil per day, oil consumption - 94.86 million barrels of oil per day in 2016.
However Sullivan expects that after oil prices growth there will be another imbalance and the story will continue.
"Oil is a boom and bust business. It is never really balanced. Oil demand is determined by variables outside of the oil fields, such as world and regional economic growth, technology change, political events, military events and more. Oil supply is determined by numerous variables that are also shifting around all the time," Sullivan said.
Brent oil price hit $45.81 per barrel April 21. On April 20 oil prices hit maximum level in 2016 - $46.02 per barrel.
Edited by SI
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