Oil losing touch with reality?
Baku, Azerbaijan, Oct.8
By Leman Zeynalova – Trend:
The latest leg-up in the oil price, to around $85 per barrel, was fuelled by persistent fears of a supply shortfall, UK-based Capital Economics consulting company said in its report obtained by Trend.
“However, we remain of the view that the market’s worst fears will not be realised and that prices will drop back over the next 6-12 months,” said the report.
Preliminary data showing a 0.1m bpd drop in Iran’s output in September was the catalyst for another leg-up in the price of Brent, which is now trading close to $85 per barrel, according to the company’s estimations.
“Markets appeared to ignore the fact that total OPEC output last month was at its highest level this year and subsequent reports that Russia and Saudi Arabia had agreed informally to raise output in the coming months,” said the consulting company.
What’s more, weekly data showing a surge in US crude stocks failed to curb investor exuberance, said Capital Economics.
“We still expect prices to fall back as the worst fears about supply disruption fade,” said the report.
“Elsewhere, the price of US natural gas jumped again this week. With stocks still well below the five-year average, the price rise appears justified. Indeed, we expect prices to rise steadily in 2019 as gas continues to raise its share of domestic electricity generation and more LNG liquefaction capacity comes on line.”
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