The Organization of Petroleum Exporting Countries, OPEC, yesterday said it was confident that the prices of crude oil would rise by next month as against the current low prices at the International market.
OPEC’s President, Mohammad Al-Sada, contended that the rise would be as a result of expected higher demand ahead of the winter season in the northern hemisphere, among others.
It will be recalled that the prices of crude oil at the international market have been hovering between $30 and $50 per barrel.
Al-Sada said since February , prices had experienced a steady improvement following a decline in crude oil production, supply outages and a decrease in oil inventories, while the global demand for oil improved in that period.
According to him, “the recent decline observed in oil prices and the current market volatility is only temporary. These are more of an outcome resulting from weaker refinery margins, inventory overhang – particularly of product stocks, timing of Brexit and its impact on the financial futures markets, including that of crude oil.”
OPEC basket price as at yesterday stood at $40.08 a barrel, compared with $39.60 recorded on last week, while Brent crude opened around $42.
Al-Sada, who doubles as Qatar’s minister of energy and industry, noted that the “economies of major oil consuming countries are expected to improve, which would augment oil demand in the coming quarters, especially in preparation for the approaching winter season in the northern hemisphere.
This expectation of higher crude oil demand in third and fourth quarters of 2016, coupled with decrease in availability is leading the analysts to conclude that the current bear market is only temporary and oil price would increase during later part of 2016.”
He, however, insisted that investment was needed not only to meet the growth in demand but also to stem the natural decline of oil production from operating wells.