Oil nears $50 mark
May 17, 2016, 7:03 am

Have global markets turned away from an oil glut? Some investment firms think so [Xinhua]

What oil glut?

Oil Futures continued to advance early Tuesday amid concern over the impact week-long wildfires in Canada have had on that country’s output as well as security fears in producers Nigeria, Libya and the Middle East.

International Benchmark Brent crude appeared to be stroking the $50 mark on Tuesday rising 0.71 per cent to $49.32.

US Benchmark West Texas intermediate was trading at $48.28, up 1.17 per cent from Monday’s close.

Meanwhile, global banker Goldman Sachs has revised its forecast for oil futures in 2016 and 2017 saying that the price of a barrel of oil will likely be around $50 this year and reach $60 by the end of 2017.

It says that oil production disruptions in April and May have helped offset additional production from OPEC giants Iraq and Iran.

As mentioned before in the BRICS Post, Iran has pledged to increase its production following the removal of economic sanctions to an additional 1 million barrels a day.

Amid the ongoing tit-for-tat tween Iran and Saudi Arabia the kingdom has also promised to increase its production.

However, this has failed to dent rising oil prices for the past month-and-a-half.

In February, oil prices had fallen to hover just around $26 a barrel.

Goldman Sachs had also warned last year that supply storage was reaching saturation therefore prompting companies to sell oil at lower prices to reduce pressure on their storage capacity.

However, the Energy Information Administration earlier this week said that supplies in the US had fallen further pushing all prices upward.

The report by Goldman Sachs and other investment firms such as Morgan Stanley also seems to indicate that demand for oil would increase at a greater pace next year and and could help stabilize prices between $50 and $60 a barrel.

This forecast comes in line with remarks made by Saudi Arabia’s oil Ministry last week when it announced that it would boost its production.

The report also appears to agree with remarks made last fall by the United Arab Emirates oil industry.

UAE Minister of Energy Suhail Mohammed Al-Mazrouei expects oil prices to fall into correction and steadily rise in 2016 due to increased demand.

“As far as OPEC is concerned and what we agreed, we are going to move to a market-driven price so supply and demand will dictate what is the right price for producers,” he said last October.

The BRICS Post with inputs from Agencies