Oil prices rise
Keywords: oil prices rise
Description: The price of a barrel of Brent crude may rise by over 50 percent by the end of the year, according to estimates compiled by Bloomberg.
A general view of a crude oil importing port in Qingdao, Shandong province, China on Nov. 9, 2008. Photo: REUTERS
A general view shows a drilling rig at the Lukoil company-owned Imilorskoye oil field, as the sun rises, outside the West Siberian city of Kogalym, Russia, Jan. 25, 2016. Photo: REUTERS/Sergei Karpukhin
Even as traders and investors continue to speculate over whether the world’s major oil exporters would cut output to shore up oil prices, analysts cited by Bloomberg are now projecting that prices may rise by up to 50 percent by the end of the year. According to a median of 17 estimates compiled by Bloomberg. Brent crude — the international oil benchmark — would trade at $48 a barrel in London by the end of 2016, up from the current $32.
A massive global oversupply of oil, caused primarily by the refusal of Russia and members of the Organization of the Petroleum Exporting Countries (OPEC) to trim output, has pushed oil prices to near 12-year lows. However, according to an earlier estimate by the Goldman Sachs Group, oil is expected to turn into a bull market in the second half of the year — tipping global oil markets into a deficit from the current surplus — as shale production in the U.S. slumps by up to 575,000 barrels a day.
A separate forecast by the U.S. Energy Information Administration also sees domestic oil production tapering off to about 8.49 million barrels a day in the fourth quarter of 2016. The agency estimates 9.11 million barrels a day in the first three months of the year.
The steep fall in crude prices over the past year, which has failed to translate into a big uptick in consumer spending, has not only sent global stock markets tumbling, but has also affected the quarterly profits and outlook of oil giants like Exxon Mobil and BP. Additionally, the oil glut, coupled with growing concerns about the state of emerging market economies, has hit industrial production in the U.S. — raising fears that the world’s largest economy may be heading toward another recession.