Oversupply to depress oil prices next year



REUTERS

Published — Friday 30 November 2012

Last update 1 December 2012 12:06 am

| نسخة PDF Print News | A A

LONDON: Oil prices are expected to fall slightly over the next year as high production feeds softening demand at a time of slowing global economic growth, a Reuters poll shows.
Reuters’ monthly oil price survey of 29 analysts forecasts North Sea Brent crude oil will average $ 107.50 per barrel in 2013, down $ 1.30 from the forecast in the October poll and compared with an average of around $ 111.90 so far in 2012.
Five analysts now expect Brent to average less than $ 100 in 2013, compared with three in last month’s poll.
Only three analysts forecast Brent will average more than $115 next year, compared with five analysts last month.
“We are notably bearish on the near term oil price environment given that we see a fundamental oversupply of oil,” said Raymond James analyst Praveen Narra, who has the lowest 2013 Brent price forecast of $ 80 per barrel in the poll.
Gain Capital Group analyst Chris Tevere is also bearish. “Our overriding outlook continues to foresee slowing global growth (which) consequently should persist in undermining (oil)demand,” Tevere said.
The Organization for Economic Cooperation and Development has cut its outlook for global growth, reducing its forecast for 2013 to 3.4 percent from 4.2 percent, saying the euro zone debt crisis was a serious threat to the world economy.
Expectations of slowing growth have led many analysts to trim their oil price projections, although most institutions are less bearish than Narra at Raymond James.
“Our analysis of supply and demand in 2013 suggests the oil market will be in comfortable surplus next year (barring an unforeseen disruption to supply) and thus we expect prices to fall back,” said Caroline Bain at the Economist Intelligence Unit.
Many analysts argue loose monetary policies being followed by leading central banks should keep a floor on oil prices, and geopolitical tensions may lead to price spikes, but most say upside risks have diminished.
“While geopolitical concerns in the Middle East have increased of late, namely in the Gaza strip, since this is not an export heavy region, it is unlikely to lead to supply disruptions,” Gain Capital’s Tevere said.
“Tensions between Turkey and Syria still persist, and this could potentially effect the supply of oil should this escalate to other nations within the Middle East. While we ultimately believe cooler heads will prevail, these elevated risks could see crude spike at times,” he added.
Harry Tchilinguirian, head of commodity market strategy at BNP Paribas, said the prospect for further quantitative easing in the US with a resulting weakening of the US dollar and a seasonal upturn in demand could support oil prices this northern hemisphere winter.
Barclays had the highest Brent price forecast in the poll with $ 125 per barrel for 2013.
Analysts also saw a narrowing of the Brent/WTI spread due to easing geopolitical tensions in the course of next year. The poll projected a spread of $ 12.8 for next year.
“New pipeline capacities in the US should help to reduce oversupply in the US Midwest and to narrow the price gap between Brent and WTI next year,” said Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt.

What's happening around Saudi Arabia

UN Secretary General Ban Ki-moon and Saudi Arabia’s permanent representative to the UN Abdullah Al- Muallami unveiled a beautifully framed old kiswa (covering) of the door of the Holy Kaaba at one of the newly refurbished halls of the world body. The...
A policeman was shot dead by an unknown gunman in Qatif in the Eastern Province on Tuesday night.According to a spokesman of the Eastern Province police, the firing took place at 11:30 p.m. in a suburb called Al-Jishi.The targeted police officer was...
JEDDAH: Jeddah Show, one of the many events of Jeddah Summer Festival 36, is attracting a large number of visitors. The sound-and-light show is being run at the Jeddah International Exhibition and Convention Center.The show tells the story of the Bri...
JEDDAH: The Riyadh Traffic Department carried out extensive campaigns on the main streets, intersections and squares in the city to boost traffic safety levels and discourage bad driving.During the first 72 hours of the campaign, traffic personnel re...
RIYADH: One of two women infected with the Middle East Respiratory Syndrome coronavirus (MERS-CoV) died here in Riyadh, while the other patient is being treated at a hospital in Al-Kharj, some 60 km from the capital. Since June 2012, the Ministry of...
AL-AHSA: Approximately 20,000 tons of Al-Ahsa dates are planned to be marketed abroad during the new dates season.Muhammad Ismail, director general of the King Abdullah City for Dates (KACD), said: “The authorities in the city are planning to increas...
JEDDAH: Al-Bagdadiya neighborhood residents in Jeddah are living in a state of worry because of 20 abandoned houses, which serve as hideouts for criminals.Residents said some houses are on the verge of collapse and have turned into shelters for crimi...
JEDDAH: A committee consisting of representatives from the Hail governorate, municipality, health department and the Saudi Food and Drugs Administration (SFDA) has ordered the closure of a restaurant in the city’s industrial area.Twelve people suffer...
The board of the Saudia Standards, Metrology and Quality Organization has announced that mandatory application of the regulations on new tires produced or sold in the Kingdom will commence in November this year.The board explained that the technical...
JEDDAH: The number of people with mental health issues or depression is increasing in Saudi Arabia due to urbanization, marital or relationship problems, and not being able to keep up with rapid progress. A Saudi mother said that her daughter suffers...
JUBAIL: Jubail beaches are expected to receive many tourists during September as a large number of people usually head to the city once the summer gets cooler to enjoy their holiday here.As part of the beach preparations for this season, the Social S...
RIYADH: More than 50 percent of vehicle users in the Kingdom are not satisfied with the after-sales service of auto agencies in the Kingdom.In a survey conducted by the Ministry of Commerce and Industry (MCI) to evaluate the performance of automobile...
JEDDAH: The Appeals Court has upheld the verdict issued by a specialized penal court which sentenced Dr. Said bin Zair to four years in prison from the date of his arrest in 1428.According to the ruling, the academician is also banned from traveling...
JEDDAH: Health authorities in the Eastern Province are expected to issue a decision soon against four Saudi nurses accused of “negligence” for an incident which led to the amputation of the hand of a Saudi girl after they tried to insert a needle in...
JEDDAH: The Jeddah municipality has closed down a popular restaurant following the discovery of a rat rummaging through food items.The rat act was captured on video and posted on social media websites. It went viral, prompting the authorities to laun...

Stay Connected

Facebook