Analysts: Truly seismic shifts in oil prices not expected
Baku, Azerbaijan, Oct.11
By Leman Zeynalova – Trend:
Truly seismic shifts in oil prices are not expected, according to the analysts of the UK Capital Economics consulting company.
“Recall that prices averaged $100 or more from 2011 until the first half of 2014, before collapsing to the high $20s earlier this year,” said the report obtained by Trend.
“Prices then recovered to a range of around $40-50 over the summer. The latest OPEC-inspired rally has taken them out of this range, for now at least, but they are still relatively stable compared to the swings that had gone before,” said Capital Economics.
In September, OPEC producers agreed during the informal meeting to cut down the oil output to 32.5 million barrels per day (bpd) from current production of 33.24 million bpd.
How much each country will produce is to be decided at the next formal meeting of OPEC in November.
The analysts remain sceptical that OPEC will be able to finalize a game-changing deal at its November meeting and expect both Brent and WTI oil to end 2016 back at around $45.
“OPEC’s compliance with output quotas has usually been poor and Russia may not prove to be a reliable partner,” said the report. “In the meantime, the recovery in oil prices is already encouraging a revival in drilling activity in the US.”
Nonetheless, the analysts believe that oil prices will probably recover a little further in 2017 as the market continues to rebalance.