In Oil & Companies News 20/07/2016
The price of Kuwait crude oil is expected to be between USD 39 and USD 42 per barrel (pb) by the end of the 2016 , according to analysts interviewed by KUNA.
They said that the prices would remain over USD 40 pb next year as markets are recovering.
The current fluctuations of oil prices were much expected as the market was making for a balance but at a slow pace that was affected by developments either in demand or supplies, analyst Mohammad Al-Shatti told KUNA.
He referred to factors that impacted oil prices over the past period, namely the rise of the US gasoline and diesel fuel and the decline of future contracts.
Al-Shatti said that oil prices had seen new falls in the aftermath of the Brexit vote in the UK, as uncertainty has the upper hand regarding consequences on the country, the European Union (EU) and the world at large.
He pointed to forecasts that the decline of demand would not exceed 100,000 barrels daily in worst scenarios, with production recovery from countries like Canada, Nigeria and Libya.
A recent report by the International Energy Agency (IEA) warned of the continuation of the oversupply on the market as a state of contango carries on.
Contango refers to a situation where the future spot price is below the current price, and people are willing to pay more for a commodity at some point in the future than the actual expected price of the commodity.
Chairman of Al-Sharq for Petroleum Consulting Company Abdul-Samea Behbehani said that Brent crude had seen a sharp fall of USD 1.4 last Wednesday to hit USD 46.6 pb.
He referred to the alterations of oil price to oversupply, especially from the North Sea.
Production from Iran reached 3.6 million barrels and from Iraq 4.22 million barrels in May, as OPEC output remained at 32.88 million barrels, one million barrels above demand, he said.
Behbehani had an optimistic view for 2017, as demand on OPEC oil is forecast to hit 33 million barrels, which will tighten the gap between supply and demand. He also expected Brent crude to stand at USD 45pb.
