Baku, Azerbaijan, Nov.3
By Leman Zeynalova – Trend:
It’s improbable that crude oil prices will reach 2011 price levels within the next several years under the current supply and demand outlook, Anthony Headrick, energy market analyst at CHS Hedging LLC, told Trend Nov.3.
The crude price downturn has forced upstream efficiency and the cost of production for new supply now occurs well below $80 per barrel, he added.
Headrick pointed out that although it’s difficult to construct a scenario where crude prices move back to 2011 levels, a confluence of factors would need to occur, including a supply shock or an unexpected geopolitical event.
From a long-term perspective, crude prices are near the bottom, according to the expert.
He recalled that the Brent price move into the upper $20’s in January was out of exhaustion following the 2014-2015 price plunge.
“A reasonable bottom can be expected in the mid to low $40’s, where once again a lack of investment in production and incremental gains in demand would occur, forcing a price bottom,” said Headrick.
Brent crude was trading up 51 cents, or 1.1 percent, at $47.37 a barrel by 04:15 GMT. US crude was up 39 cents, or 0.9 percent, at $45.73 per barrel.
Crude prices were underpinned by concerns about supply disruptions after militants in Nigeria's southern Niger Delta oil hub attacked a pipeline operated by the Nigerian National Petroleum Corporation on Nov.2.
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