LONDON: A top Saudi energy project funder expects oil to trade between $60 and $70 by mid-2019 as the price of crude rose on Tuesday.
Arab Petroleum Investments Corporation (Apicorp) made the prediction in a report as the oil price again ticked higher, supported by the hopes that talks between China and the US would defuse current trade tensions.
“I think there is a very good chance that we will get a reasonable settlement that China can live with and that we can live with,” US Commerce Secretary Wilbur Ross said.
After a turbulent final quarter in 2018, oil prices have been supported in the first week of 2019 by cuts from OPEC producers and Russia.
However, a glut of new US supply and a surge in shale oil drilling is also putting downward pressure on the price.
S&P Global Ratings on Tuesday lowered its average annual price assumptions for both Brent and West Texas Intermediate (WTI) crude oil for 2019 by $10 per barrel to $55 and $50, respectively.
“The ongoing trade war between the US and China as well as news of China’s economic slowdown, has led to concerns about the outlook for global demand,” the ratings agency said in a statement.
“Moreover OPEC, particularly Saudi Arabia and Russia, were producing at record levels to offset what was expected to be a meaningful reduction in global supply due to the Iranian sanctions.
“However, the sanctions fell short of expectations on Nov. 2 when it was announced that eight countries would be exempted for six months from Iranian oil import sanctions. This had the effect of drastically increasing the amount of oil expected to be on the market.”
Apicorp, which is headquartered in Saudi Arabia, is a multilateral development bank with shareholders from KSA, the UAE, Bahrain, Kuwait, Qatar, Egypt, Syria, Algeria, Iraq and Libya.