Oil price in 2017-18 not to exceed $60 per barrel

Baku, Azerbaijan March 30 By Elena Kosolapova - Trend: A long period of prices between $40-$60 per barrel may be the best that firms can hope for in 2017-2018, Tom Kloza, Global Head of Energy Analysis in Oil Price Information Service (OPIS), owned by IHS research company, said. “Time will restore the oil [supply and demand] balance… But there is no quick fix to the oil glut,” Kloza told Trend by email. The analyst believes that world oil prices will trade in a band between $30-45 per barrel for the next few months. He noted that downward pressure on oil prices comes from refinery maintenance in Europe and Asia that will reduce demand for crude and a huge glut will not be worked off quickly, which is to say that filled storage will be a theme for the first half of 2016, perhaps only changing in the last 4-5 months of the year. According to the US Energy Information Administration’s data, world oil supplies hit 95.74 million barrels per day in 2015, while consumption reached 93.7 million barrels per day. Kloza noted that demand is actually quite brisk worldwide, and can be expected to grow by about 1.2 million barrels per day. He said risks to that forecast come in the way of slowdowns in Asian economies and weakness in foreign currencies in the commodity-dependent countries. Moreover, a cut by the Saudis or an “event” that removes oil can always help restore balance, according to the expert. He noted that Libya, Nigeria, and Iraqi Kurdish regional government already have seen some oil knocked out by violence. “But this [oil] glut took many calendar quarters to accrue, and it will not disappear in a few months. Best estimates are that oil begins to balance with supply and demand about equal in the fourth quarter of this year, and demand might exceed daily supply and begin removing some of the glut in 2017,” Kloza said. The analyst said that the seeds for a rise late in the decade are being planted as companies cut back on hundreds of billions of dollars of investment, while producers always need to find new oil in order to account for the depletion of existing wells. Speaking about the agreement reached by a number of oil producing countries on freezing oil production at the January level, the expert said that it will not be able to solve the problem of over-supply. Kloza believes that it will be a hollow meaningless agreement with no enforcement of compliance. Earlier energy ministers of Russia, Saudi Arabia, Venezuela and Qatar agreed to freeze the oil output at Jan.11 level. Later, some more oil producing companies joined this initiative. The price of June futures for Brent oil was $40.05 per barrel on March 30 morning. Edited by SI Follow the author on Twitter: @E_Kosolapova Follow us on Twitter @TRENDNewsAgency