Crude price to grow at slower pace in 2017
By Fatma Babayeva
Oil prices will keep rising next year but at a slower pace, according to the forecasts of Saxo Bank.
Ole Hansen, head of commodity strategy at Saxo Bank stated that recently, price of WTI and Brent crudes fluctuated at the price range between $45 and $50 per barrel.
Depending on the type of the demand in countries of the Northern Hemisphere, particularly in the U.S. during this summer, it will be possible to project that oil prices will continue increasing till the end of the year, he told Trend, adding that the figure will be within a range of $50 to $55 per barrel by the end of 2016.
At the moment, Saxo Bank does not expect Brent price to exceed $65 per barrel by the end of 2017, he added.
Hansen further said that significant disruptions in supply were the main drivers enhancing growth of oil prices during May. Some of them will still be in place during June as well.
The market will closely watch on the developments in the U.S. industry. The recovery in the crude oil sector during the last three months can delay freezing the output volumes. In case of any changes, a short-term negative impact may be observed on prices, which will draw all attention again to OPEC countries that keep expanding oil production recently, said Hansen.
Other crucial factor will be decision of the U.S. Federal Open Market Committee (FOMC) on tariffs and possible impact of this decision on USD.
The violations in Libya and Venezuela will also be under supervision, where production is deemed to rescue the countries that are on the verge of chaos, emphasized the expert.
The U.S. demand for gasoline and petroleum products during the summer will be key factor, taking into the account its potential impact on oil demand and capability to reduce highest stock level of 80 years, said Hansen.
In mid May, the U.S. bank Goldman Sachs lowered its U.S. crude price outlook for 2017 to $52.50 from $57.50 per barrel as it said markets would return to surplus by the first quarter of 2017.
In the meantime, after failure of OPEC’s Vienna meeting, Capital Economics retains its end-2016 forecast at $45 a barrel for Brent, a few dollars lower than current prices, rising to $60 only 12 months later.
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Fatma Babayeva is AzerNews’ staff journalist, follow her on Twitter: @Fatma_Babayeva
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