UK analysts doubt in oil deal at Algeria meeting
Baku, Azerbaijan, Aug.24
By Aygun Badalova - Trend:
Oil prices will fall over the rest of the year as any substantial agreement between OPEC and non-OPEC countries at the upcoming meeting in Algeria is unlikely, Tom Pugh, the economist at British economic research and consulting company Capital Economics believes.
“The recent rally in oil prices has been primarily driven by speculation about a deal between OPEC and major non-OPEC producers to freeze production. We think that prices will fall back, though, as the outcome of next month’s unofficial meeting underwhelms expectations,” economist said in the report, obtained by Trend.
The informal OPEC meeting is expected in late September in Algeria. It is expected that the talks on oil production freeze will be held between OPEC and non-OPEC countries.
Oil prices fell Wednesday, with fears over a US crude stock build wiping out gains made Tuesday on the back of a report that Iran could participate in a joint production freeze, the Wall Street Journal reported.
The October contract for global crude benchmark Brent was down 1.6 percent at $49.16 a barrel while its US counterpart WTI was down 1.9 percent at $47.2.
“We believe that the price of both the major oil benchmarks will fall over the rest of the year. Indeed, we think that they could fall back quite sharply if, as seems likely, OPEC and non-OPEC members are unable to agree anything substantial,” Pugh said in the report.
Capital Economics analysts’ end-2016 forecasts for the prices of both Brent and WTI are $45 per barrel.
Nevertheless, they still expect oil prices to rally again next year as the market moves further into deficit and stocks are drawn down with end-2017 forecast of $60 per barrel for both Brent and WTI.