Energy market is showing certain recovery of oil price. Experts are certain that the rise is temporary, as pressuring factors remain topical.
Ministers of countries-members of OPEC are going to hold a meeting to discuss market strategy and current situation. The previous meeting was held last December. Since then oil has already managed to drop by one third, and then regain 80 percent of its value. Last month North Sea oil brand Brent gained 9 percent.
Bloomberg agency admits that oil market has not seen such stable growth as last month since 2011. For the last week of May the price of this brand has exceeded 50 dollars per unit two times. Eventually, the energy carrier has returned the price, previously recorded last October.
As in any other case when oil is showing a steady tendency to growth or decline for a long time, experts start bringing out opposite predictions. Some experts incline to an opinion that further growth is to be expected, whereas others predict decline in the nearest future. At this point pessimistic analysts definitely outnumber.
On the eve of OPEC session the value of petroleum has slightly dropped, thus showing market expectations concerning result of negotiations. Before that Brent oil blend was traded at 49 dollars per unit, at the level of a 6-month maximum. Last Thursday, May 02, North Sea oil bland was traded between 49.21 and 50.30 dollar per supply unit, but in the afternoon the energy carrier showed a tendency to decline.
Increase of oil price has, inter alia, been influenced by temporary factors, such as forest fires in Canada, as well as armed conflicts in Libya and Nigeria. However, even taking instability into account, price rise of petroleum has become unexpected for many experts. Michael Krutihin, analyst of oil-and-gas industry and partner of RusEnergy consulting agency, claims that there is no sense in looking up to short-term tendencies concerning price of petroleum.
There will be No Expensive Oil
The expert is convinced that it is unreasonable to look up to short-term price development of oil, which is caused by military actions in a certain country or forest fires. Krutihin reminds that at the end of 2014 he predicted change in the cost of energy carriers for the next 2 years. These days his expectations are coming true. Speaking about 2 years, the expert claimed the average price of Brent oil to amount to 45 dollars per supply unit. His prediction has proved correct for 2015.
The analyst believes that present factors will not give a serious rise to oil price. There are no fundamental up-to-date factors, so there is no point in reconsidering the annual average forecast. Krutihin disagrees with analysts, who predict further considerable price rise of petroleum.
Some experts are certain that market balance will be restored in the nearest future, and others claim that balance has already been restored. Krutihin also pays attention to market “oversupply”, which is shown by a great number of tankers, waiting to be unloaded. Energy carriers are so many in number that consumers simply cannot take them quickly and easily.
Besides, every time average price of petroleum goes above 50 dollars, one should expect more oil-producing enterprises to appear at the market. In the USA petroleum industry can react to market changes in maximally short term, which is one of features of shale oil recovery. Therefore, current price rise should be considered only as a result of short-term factors, whereas fundamental market features that exclude considerable price rise remain.
Supply of petroleum still slightly exceeds market demand, as all oil-producing countries are trying to fill the market at most. All exporting countries are also known to have plans on increasing the volume of recovery. This is brought about in Saudi Arabia, Russia, as well as in Iraq, Iran, Kuwait, and other countries.
On the other hand, use of petroleum is not showing any serious growing tendency. Many authoritative analysts predict that economic growth of China this and next year will remain within 7 percent. In 2018 the expert predict a rapidly slowdown of economic growth rate in the country, which will certainly have negative influence on quantity of petroleum and other energy resources being used. Therefore, considerable increase of global use of petroleum is not to be expected. At the same time, supply will increase, which will form even greater disbalance.
