Oil prices to stay at current level in short-term

Oil prices will stay at the current level in the short-term perspective with Brent average at $60 per barrel in 2015 and $65 per barrel in 2016, Thomas Pugh, commodities economist at British economic research and consulting company Capital Economics believes.

“Last month’s increase in supply from OPEC just adds to the glut of oil already in the market. And although the cartel has also boosted its demand estimates for this year, global supply should still be greater than demand, meaning that stocks should continue to build over the year,” Pugh said in a report, obtained by Trend.

The latest OPEC Monthly Oil Market Report stated that, according to both primary and secondary sources, OPEC production rose sharply in March compared to the previous month.

The Cartel’s production increased in March by 810,000 barrels per day (bpd) to 30.79 million bpd, according to the report.

Following the OPEC announcement, the prices for Brent crude fell by $1 to $62.98 per barrel. WTI price was down by $0.81 to $55.9 per barrel.

The majority of the rise in OPEC’s production came from two of its members where output is most volatile, namely Iraq and Libya, Pugh said. But there was also a significant increase in output from Saudi Arabia, he added.

The recent rise in OPEC production has left spare capacity at its lowest level since the middle of 2013, according to the economist.

“Whilst this should be perfectly adequate in an environment of ample stocks, if there were to be an unexpected outage or a sudden surge in demand, then prices could still spike,” he said in a report.

The recent rise in OPEC’s production, according to the report, is partly due to output recovering from a series of temporary disruptions.

Pugh expects the cartel to keep production around this level for the next year, but lower growth in non-OPEC output and higher demand should put some upward pressure on oil prices.

OPEC members held a meeting in ministerial level November 27, 2014 to evaluate the global oil market and the falling trend of the oil price. Iran and Venezuela wanted to lower the Cartel's oil output and set a new ceiling level below the current 30 mbpd level.

/By Trend/