The Organisation of Petroleum Exporting Countries (OPEC), is hopeful that oil prices will rise in September through December, following expectations of higher oil demand. Analysts have said this should put pressure on oil producing nations to raise production for the expected increase in demand which will prompt the price increase. OPEC president, Mohammad Al-Sada, who made the projection, also disclosed that an informal meeting of OPEC member countries was scheduled to take place on the sidelines of the International Energy Forum, a gathering of producers and consumers, in Algeria from September 26-28.
Thank you for reading this post, don't forget to subscribe!Al-Sada, who is also Qatar’s Energy Minister, in a statement, said since February 2016, oil 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. Al-Sada said that 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,” he said. OPEC basket price yesterday stood at $40.08 a barrel, compared with $39.60 on Friday, while Brent crude opened around $42.
Al-Sada added that the economies of major oil consuming countries are expected to improve, which in turn will 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 will increase during later part of 2016. Al-Sadah, noted 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.