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Increase in oil prices inevitable

20 April 2016 10:19 (UTC+04:00)
Increase in oil prices inevitable

By Fatma Babayeva

The balance has already begun to be restored in the oil market, and the increase in oil prices is inevitable, Cyril Widdershoven, investment consultant in the energy sector told Trend news agency.

The current volatility in the oil market supports the idea that in the case of occurrence of new geopolitical confrontation in the world, oil prices will go up, said expert.

Widdershoven stressed that growth in oil demand will push commodity prices up against the background of lacking investments and new developments.

If the market is rational, a steady increase in oil prices will be observed during the next few months, he added.

The expert believes that a possible new agreement between OPEC, Russia and other producers in June will contribute to the further growth of prices.

It is difficult to predict crude prices, but $60 per barrel is absolutely possible.

BMI Research which part of Fitch Group also expects that the balance in the oil market will begin to recover in the second half of 2016. Even, oil shortage will be experienced in the market during 2017.

In the short term, there is a risk for oil prices to decrease but generally, expectations are positive. Brent prices will increase significantly by the end of 2016, BMI researcher Emma Richard told.

Currently, global oil prices continue to fall according to trading activities on April 19. The failure of Doha meeting on April 18 which held in Qatar between OPEC member states and other oil producers had a negative impact on oil prices. The participants were not able to come to an agreement on freezing oil output in order to stabilize the oversupplied market.

The price of the June contracts for North Sea Brent crude dropped by $0.23 to $42.66 per barrel at the London ICE Futures Exchange.

Meanwhile, price of May futures of the US WTI crude declined by $0.4 to $39.67 per barrel.

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Fatma Babayeva is AzerNews’ staff journalist, follow her on Twitter: @Fatma_Babayeva

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