OPEC expects oil price back above $70 by end-2015
Source: www.chinamining.org Citation: Reuters Date: December 29, 2014
Current low prices likely to stimulate demand eventually
Arab OPEC producers expect global oil prices to rebound to between $70 and $80 a barrel by the end of 2015 as a global economic recovery revives demand, delegates of the Organization of the Petroleum Exporting Countries (OPEC) said this week, in the first indication of where the group expects oil markets to stabilize in the medium term.
The delegates, some of whom are from core Gulf OPEC producing countries, said they may not see - and some may not even welcome now - a return to $100 any time soon.
Once deemed a "fair" price by many major producers, $100 a barrel crude is encouraging too much new production from high cost producers outside the exporting group, some sources say.
But they believe that once the breakneck growth of high cost producers such as US shale patch slows and lower prices begin to stimulate demand, oil prices could begin finding a new equilibrium by the end of 2015, even in the absence of any production cuts by OPEC, something that has repeatedly been ruled out.
"The general thinking is that prices can`t collapse. Prices can touch $60 or a bit lower for some months and then come back to an acceptable level, which is $80 a barrel, but probably after eight months to a year," one Gulf oil source said.
"We don`t see $100 for next year, unless there is a sudden supply disruption," a separate Gulf OPEC source said. "But an average of $70-80 for next year - yes."
The comments are among the first to indicate how big producers see oil markets playing out next year, after the current slump that has almost halved prices since June. Global benchmark Brent closed at around $60 a barrel on Tuesday.
Their internal view on the market outlook will provide welcome insight to oil company executives, analysts and traders, who were caught out by what was seen by some as a shift in Saudi policy two months ago and have struggled since then to understand how and when the market will find its feet.
At the weekend, Saudi Oil Minister Ali al-Naimi was blunt when asked if the world would ever again see triple-digit oil prices. "We may not," he said.
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