AKuwaiti oil expert indicated Sunday that the prices of oil will not return to its previous levels as the fair price is to range between $ 90 and 95 per barrel, adding that oil prices for current year are to close at these levels.
Oil prices inability to reach its previous levels will be due to supply increasing more than demand if urgent political or natural crisis did not occur, Khalid Boodai, President of Horizon Management Consulting, stated to KUNA.
He attributed the supply increase to the output rise of oil producing countries that were and still unable to reach a full-production capacity such as Iraq and Libya, and to increase of US and Canada production of shale oil. Moreover, the demand from China slipped due to industrial production contraction, he said.
The decline in oil prices during the past period is due to several reasons, including relative decline in China's industrial production, increase of oil flows in Iraq and Libya, and the US currency rate exchange rise, which is inversely related with oil prices, said Boodai.
He also said that psychological factor related to shale oil production has a significant impact on current prices in oil markets, including expectations on shale oil occupying a major place at markets in the future due to its production increase in the U.S. and Canada, as well as indications on 50 percent costs decrease of oil shale production, originally ranged between USD 70 to 75 per barrel, in three or five years, to be USD 40 per barrel only.
However, shale oil production, despite its direct impact, will not be significant at current time, Boodai said, noting at the same time that it is still affecting prices because it decreases the U.S. demand, leaving imported oil amounts to the U.S. markets to await buyers, in addition to long-term oil purchase contracts that oil markets traders take into account.
The Organization of the Petroleum Exporting Countries (OPEC) will not stand still toward oil prices decline as it has an attempt to decrease oil production of its member-countries, he noted, adding that OPEC does not take such a step unless prices drop below USD 90 per barrel.
Currently, the fair price is ranged between USD 90 and 95 per barrel in accordance with inflation volume, Boodai indicated, adding that OPEC countries would take decisive steps if prices drop below USD 90 per barrel, which would threaten their economies and cause them financial losses if inflation volume topped oil prices.
Meanwhile, oil prices will not decline or collapse significantly as it will remain at USD 90 per barrel until end of 2014, Boodai expected, adding that the prices would range between USD 85 to 95 during 2015.
Oil prices inability to reach its previous levels will be due to supply increasing more than demand if urgent political or natural crisis did not occur, Khalid Boodai, President of Horizon Management Consulting, stated to KUNA.
He attributed the supply increase to the output rise of oil producing countries that were and still unable to reach a full-production capacity such as Iraq and Libya, and to increase of US and Canada production of shale oil. Moreover, the demand from China slipped due to industrial production contraction, he said.
The decline in oil prices during the past period is due to several reasons, including relative decline in China's industrial production, increase of oil flows in Iraq and Libya, and the US currency rate exchange rise, which is inversely related with oil prices, said Boodai.
He also said that psychological factor related to shale oil production has a significant impact on current prices in oil markets, including expectations on shale oil occupying a major place at markets in the future due to its production increase in the U.S. and Canada, as well as indications on 50 percent costs decrease of oil shale production, originally ranged between USD 70 to 75 per barrel, in three or five years, to be USD 40 per barrel only.
However, shale oil production, despite its direct impact, will not be significant at current time, Boodai said, noting at the same time that it is still affecting prices because it decreases the U.S. demand, leaving imported oil amounts to the U.S. markets to await buyers, in addition to long-term oil purchase contracts that oil markets traders take into account.
The Organization of the Petroleum Exporting Countries (OPEC) will not stand still toward oil prices decline as it has an attempt to decrease oil production of its member-countries, he noted, adding that OPEC does not take such a step unless prices drop below USD 90 per barrel.
Currently, the fair price is ranged between USD 90 and 95 per barrel in accordance with inflation volume, Boodai indicated, adding that OPEC countries would take decisive steps if prices drop below USD 90 per barrel, which would threaten their economies and cause them financial losses if inflation volume topped oil prices.
Meanwhile, oil prices will not decline or collapse significantly as it will remain at USD 90 per barrel until end of 2014, Boodai expected, adding that the prices would range between USD 85 to 95 during 2015.
Source:
Mubasher
