Oil prices pushed up back to $50 a barrel

/By Azernews/

By Fatma Babayeva

Global oil prices again vary around $50 a barrel and are projected to break a new maximum next year.

The price of August contracts of Brent benchmark rose by 0.75 percent to $51 a barrel in London ICE on June 22 by 5:35 am, while WTI crude by 1.04 percent to $50.37 a barrel in NYMEX on the same day.

In the meantime, the price of a barrel of Azeri Light crude oil decreased by $0.41 to stand at $50.39 in the global market.

Only OPEC’s oil basket price cost a bit lower - $46.02 a barrel on June 21.

Analysts of the British consulting company Capital Economics believe that global oil prices will renew gains in 2017, when global oil market will rebalance on a more sustainable basis.

The price of oil has already recovered beyond the company’s end-2016 targets of $45 for both Brent and WTI. However, Capital Economics is not yet persuaded to change these forecasts.

The company expects Brent price to average $41.75 a barrel this year. In 2017, oil prices are forecasted by the analysts to reach $60 a barrel.

The experts of Capital Economics noted that the recovery has been flattered by supply disruptions which may prove temporary, while prices are now back at levels at which drilling activity in the U.S. is likely to rebound.

Oil prices are also vulnerable in the near-term to a UK vote for Brexit, analysts added.

Today, investors are uncertain about the future of the oil prices due to upcoming referendum in the UK which will decide whether the Kingdom leaves or remains within the EU.

Analysts of Raymond James & Associates think the surge observed in the global oil prices during recent months is the beginning for higher oil prices. The analysts of the company expect price of WTI crude to average $80 a barrel by the end of the next year, Bloomberg reported on June 20.

Company’s expert Praveen Narra noted that there is no need for inventory levels to come down. The decreasing production level and the continued increase in demand will balance the oil market in the second half of this year. In 2017, inventory dry down will be over 1 million barrels a day.

Production outside the U.S. will be more curbed than expected, the company’s experts said, adding that demand for oil tied to fuel consumption was actually strong during recent years.

The demand growth is forecasted by the company to come mostly from OECD markets, primarily China and India in 2017.