Due to factors including Middle East tensions and global economic slowdown, oil prices to remain stable this year.
Oil prices are likely to remain stable this year as recent turmoil has failed to raise prices in a market where demand is weak and warnings of a global economic slowdown mount, a Reuters survey showed on Monday.
The survey, which included 53 economists and analysts, predicts Brent crude will average $65.19 a barrel in 2019, little changed from $65.02 in last month’s forecast. However, it is slightly higher than the average price of Brent crude since the beginning of the year at $64.76 a barrel.
US West Texas Intermediate (WTI) crude futures are expected to average $57.96 a barrel, compared with $57.90 last month. The average price of US crude since the beginning of the year was $57.11 a barrel.
“The oil market is facing tough times… The recent attack on two oil facilities in Saudi Arabia has made clear the risks to crude supplies, which is why price jumps could happen anytime in the short term ” said Carsten Fritsch, senior commodities analyst at Commerzbank.
“On the other hand, the fundamentals in the oil market are deteriorating. Demand growth is weakening, non-OPEC oil supplies are rising dramatically, and the commitment to production by OPEC and its allies has receded recently, so we don’t see the recent price jump being sustainable.
Oil prices posted their biggest one-day jump in 30 years, after an attack on two Saudi Aramco facilities earlier this month halted supplies of half of the world’s top crude exporter.
The attack caused haze in the market and increased tensions in a volatile region.
“Ultimately, the impact of drone attacks on oil prices depends on two key factors: how long it will take for Saudi Arabia to restore the damaged facilities to work and whether there will be other direct attacks,” said Calin Birch, an analyst with the Economist Intelligence Unit.
Despite the attack, most analysts said OPEC could continue to cut production until the end of next year and ruled out easing sanctions on Iran and Venezuela soon.
Although there is enough spare capacity to make up for production shortfalls, analysts said the trade dispute between the United States and China and increased output from non-OPEC countries will curb oil prices in the long run.
Analysts expect global oil demand to grow between 0.9mn and 1.3mn bpd in 2019 and 0.8mn to 1.5mn bpd next year.
The US Energy Information Administration cut its forecast for global oil demand growth in September for eight consecutive months to 0.89mn bpd.
On the supply side, respondents said non-OPEC production would continue to rise as the United States dominated global supply growth, amid modest increases from Brazil, Norway and Mexico.
“If Trump remains the front-runner, US production is expected to continue rising to new record highs, likely to exceed 13.5mn bpd, policies will remain unchanged, and Trump’s energy-supporting policies will continue to be greatly enhanced till the United States becomes the world’s largest oil exporter” said Edward Moya, chief market analyst at OAND.