Expert says no conditions for oil price bouncing back to $100/barrel
By Elena Kosolapova
There are no conditions to restore oil prices at their previous
level of $ 100 per barrel or more in the short and medium term,
Anton Soroko, analyst of Russia’s Finam Investment Holding told
Trend April 21.
"A qualitative breakthrough in the global GDP growth rates and the
expansion of oil consumption are required to increase the oil
prices up to $100-120 per barrel.
“We have not seen such preconditions yet,” he said. "At the same
time, oil prices will continue restoring slowly. They will reach
$70-80 per barrel by late 2015 and early 2016.”
Soroko said that the oil prices approximately $50-60 per barrel are
not very interesting for manufacturers of highly viscous and
hard-to-reach oil, shale oil.
“This reduces investments in the largest companies,” he said. “In
particular, the number of drilling rigs in the US, working on oil
shale, is being reduced.”
“In the long term – during 3-5 years – this will definitely affect
the oil supply on the world market and accordingly, it will
positively affect the prices,” said the expert.
The dynamics of the oil production in the US, the way it will
change, the number of shale oil producing companies which will go
bankrupt, the future of the commercial reserves will have a big
impact on the oil prices, according to the expert.
Moreover, the growth rate of China’s economy, the main forecasted
global oil and gas consumer for the coming decades, is a very
important indicator, he said, adding that the growth dynamics of
the world GDP is also important.
“The slowdown in global GDP growth will have a negative impact on
the dynamics of prices,” the expert said.
As for the OPEC countries, Soroko believes that despite their
desire to strengthen market positions through the leaving of a
number of shale oil producers, the low oil prices for a long time
are also disadvantageous for them, since most of these countries
rely largely on the oil and gas revenues while forming local
budgets.
Therefore, as he said, in the issue of oil production quotas, OPEC
will become more loyal.
“In general, OPEC’s decision to reduce production quotas will
depend on the future oil prices,” said Soroko.
“If prices rise to the level of $65-$70 per barrel, it probably
will not be necessary to reduce the quota,” said Soroko. “But if
they start to fall again to $50 per barrel, then there is a
possibility to reduce quota.”
Currently, OPEC controls 40 percent of world oil supplies.
Oil rates have decreased by almost half since summer of 2014 - from
$110 to around $59 per barrel of Brent oil. At the same time, the
cost of a barrel of Brent oil already approached $45 in 2015.
Analysts attribute the collapse of oil prices to its excess on the
market.
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