Short term news on oil reserves and demand to be more of negative

21 december 2015 | RBC-TV

Alexander Kurdin, the expert of the Analytical Center, talked live on RBC-TV. According to him, there is no shortage in oil price outlooks; however, at the stage of panic, they are more like tasseography. ‘The stronger the price of oil falls, the faster it rebounds. However, we cannot be 100% sure that the price will not fall to $30 a barrel and even lower. In this case, the market’s reaction will be fast and the recovery will be quick. The price of $40 per barrel can stay for a long time, given the relatively large excess,’ considers Mr Kurdin.

Alexander Kurdin
Alexander Kurdin
Department for Fuel and Energy Sector

Data on oil reserves have a strong effect on the price but so far the demand is weak: in the 4th quarter the global demand will drop, which differs from the previous trends, when the demand in the 4th quarter grew up compared to the 3rd quarter. The IEA notes significant decrease, so for now news on oil reserves and demand will be more of negative, he said.

Problems with the supply may promote oil price growth, considers Mr Kurdin. This can happen if it turns out that for some reason Iran cannot increase production fast enough because of sanctions, for example, and there are troubles with deliveries in Iraq, according to the expert. In addition, as demand is determined by emerging countries, trends of the increasing oil demand are sufficiently stable. Low prices contribute to that, but no extraordinary demand is expected, he added.

The US ban on oil exports will not have strong effects on the industry. ‘First of all, this process is already included in the price, as it was predicted. On the other hand, everything is determined by the balance of production and consumption. Even if the US is now willing to deliver bigger amounts of oil to the world market, given that they are a major importer, they will have to purchase more. Changing the order of the addends does not change the sum,’ said Mr Kurdin. The only thing that will be affected by lifting the ban on exports is the ratio between quotations of WTI, the US and other brands, according to the expert.

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