Experts said the brent oil prices will stay stable this week amid weaker global demand and market oversupply, Gulf news reported.
The news come after crude oil prices fell below $83 last week hitting a new a four-year low and losing nearly one fifth of its value as prices started to tumble since June. Brent crude for December rose above $86 a barrel on Friday, bouncing back from $82.93 earlier in the week.
“It’s obvious the rising supply and weaker demand is overpowering the tensions in the Middle East and Ukraine,” said Alp Eke, senior economist at National Bank of Abu Dhabi (NBAD). Eke added that Brent is likely to “remain as it is” this week at $85 a barrel.
Arjuna Mahendran, chief investment officer, Wealth Management Division at Emirates NBD, said he thinks Brent will stabilise between $83 and $85 this week. He also said “prices are close to the bottom” adding that “weakness in demand justifies current prices”. Mahendran saw recent economic data coming out of Germany and the United States as a factor in shaking Brent prices last week.
German sentiment fell to minus 3.6 in October from 6.9 in September on the ZEW Centre for European Economic Research’s index of investor and analyst expectations. US data showed retail sales slid 0.3 per cent in September.
Oversupply and weaker economic demand out of China has sent prices spiralling in the second half down from this year’s peak of above $115 in June.
Market watchers had thought Saudi Arabia and Opec members would trim production to prop up prices. However, last month Saudi Arabia increased production by 100,000 bpd, while Libyan production has jumped by more than 500,000 bpd in recent months. Last week along with fellow Opec members Kuwait, Iraq, Iran and the UAE, the kingdom cut prices to European and Asian buyers.
“The Saudis are not really a big price setter any more. You have the United States, Russia, Iraq and Libya — there is a lot of oil on the market,” UK-based Shwan Zulal, an associate fellow at King’s College and the director of London-based Carduchi Consulting, said.
Zulal said after four to five “very good bumper years” of stable $100 a barrel that the market is now saying those days are over. “You can see we are going to stay at the $85 to $90 a barrel for the foreseeable future,” he said. “There is no reason for prices to fall significantly below these levels,” Zulul added.
