Think Tank Predicts Crude Oil Prices To Drop To $80

Think Tank Predicts Crude Oil Prices To Drop TO $80
Think Tank Predicts Crude Oil Prices To Drop TO $80

Oil continues to defy the fundamentals of supply and demand. As markets closed for the holiday oil prices climbed 31 cents, or 0.3%, to close at $99.22. Crude Oil futures registered little reaction to data that showed orders for durable goods rose a stronger-than-expected 3.5% in November, topping forecasts for a rise of 2%. Oil and other energy commodities posted stronger gains. Oil’s benchmark Brent crude hovered near 2-week highs as conflict in South Sudan threatened that country’s oil output amid production cuts in Libya that were already curbing global crude supplies. Analysts said the continuing Libyan production outage and falling commercial crude stocks are among the supports for crude-oil prices in the short term. “We continue to note that there is more upside potential than downside risk from current (Libyan) production levels,” Citi Futures energy strategist Timothy Evans said in a report on Monday.

Brent was up 0.4 percent at $112.01 as the markets closed for the holiday. U.S. gasoline was the outlier rising 1.4 percent to $2.8175 a gallon, extending 15-week highs hit in the previous session, as refinery outages in the United States and Europe thinned supplies while demand remains robust. A strike in France has shut a third of the country’s refinery capacity.

The EIA official inventory for WTI crude oil has been delayed to Friday due to the holiday but the API weekly petroleum report was released yesterday after the markets closed early for the holiday. The American Petroleum Institute’s weekly U.S. oil inventory data, showed a rise of 500,000 barrels for the week ended Dec. 20, the Energy Information Administration’s own weekly report may contradict the API’s data. A Bloomberg survey tipped the EIA to report a 2.3-million-barrel decline for the week which is itself forecasting a drop of between 3 million and 4 million barrels. The API data out Tuesday also reportedly showed a 2.5-million-barrel weekly decline for gasoline stocks, and a 700,000-barrel fall for distillates, including heating oil.

In a very strange report released yesterday a major think tank is forecasting crude oil prices to tumble. The price of crude oil is forecast to fall to $80 per barrel in the coming few years, due to expected growth of non-conventional oil output, according to a Kuwait-based think-tank. The Diplomatic Centre for Strategic Studies said in a report, released on Tuesday, that it is difficult to make specific anticipations regarding the crude prices due to prevailing variables on the market.

On unpredictable factors, it mentioned international and internal conflicts, particularly in oil-producing countries, such as Libya, Nigeria and Iraq. Nevertheless, the crude prices will remain, mainly, affected by supply and demand. World oil demand, which amounted, in 2013, to approximately 89.5 million barrels per day (bpd), would reach some 94.5 million bpd in 2018.

Industrial nations’ demand, which stood at 45.5 million bpd in 2013, would drop to 44.5 million bpd in 2018. The report said the oil demand by China and India would continue to grow, by three million bpd, some 60 per cent of the global oil demand growth. (this information comes from a report in Gulf News.)


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