Tuesday, August 09, 2016
Oil prices have kept investors and oil companies on edge over the past months. Prices, while still volatile, have at least been climbing recently. The worst may be over for now, but industry analysts are still predicting that oil markets will remain flat for quite a while to come.
Analysts at Goldman Sachs are now predicting crude oil prices to remain somewhat flat at about $45 to $50 per barrel through the middle of 2017, according to a recent CNBC report. This estimate is based on a market analysis that anticipates little change in global supply and demand during the next year.
According to the Goldman Sachs analysis, while oil fundamentals have been improving recently, they also remain fragile. A number of factors could affect oil prices in the near future, like the slowing demand growth in China and India, wildfires, Iranian production and potential disruptions in Nigeria and Libya. Meanwhile, a supply deficit of about 230,000 barrels per day is also expected throughout the last half of 2016. Another factor that may contribute to prices remaining flat in the coming year is that it seems likely the industry’s recovery was front-loaded earlier this year.
The silver lining in the report is an expectation that prices should remain relatively stable. Barring a serious ramp-up in production or severe slowdown in consumption, Goldman Sachs expects that prices should remain level and not fall back below $35 per barrel, says 24/7 Wall St. Examples of the type of demand-lowering event that could negatively impact crude prices this year include increased production in Nigeria or Libya, a reduction in China’s building of crude reserves, or a global slowdown.
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- oil prices expected to stay flat