GI Market Survey: Brent Crude Oil Prices to Recover in 2019 and Average at $60+ a Barrel

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GI Market Survey: Brent Crude Oil Prices to Recover in 2019 and Average at $60+ a Barrel

GI Market Survey: Brent Crude Oil Prices to Recover in 2019 and Average at $60+ a Barrel

Abu Dhabi, January 7, 2018 (Gulf Intelligence) – Brent Crude oil, which collapsed 40% in the fourth quarter of 2018 to almost hit a floor of $50 a barrel, will recover this year and average above $60 a barrel, according to two thirds of the 100 energy industry executives polled last week in a Gulf Intelligence curtain raiser survey conducted ahead of the Jan. 9th UAE Energy Forum.

The coalition of 25 OPEC and non-OPEC states, that came together for the first time in late 2016 to slash global oil supplies in order to reverse a 3-year oil price slide, agreed last month to once again cut their collective output by 1.2 million barrels a day in 2019 which should be sufficient to keep oil prices above $60 a barrel this year, according to 74% of those polled in the GIQ Survey.

“Market dynamics will always change, and we are used to that,” HE Suhail Al-Mazrouei, UAE Minister of Energy & Industry, told Gulf Intelligence in a recent interview.  “Maybe the pace of fluctuation was higher in the past weeks, but that is driven not only by market fundamentals; it’s driven as well by geopolitics, trade wars, sanctions and many other things,” said His Excellency, who just completed a one-year term as OPEC President.

This week US negotiators will travel to Beijing for a crucial round of talks with their Chinese counterparts in an attempt to break the deadlock in a year-long dispute over trade tariffs. Global markets, worried about the impact of tariffs on growth, have suffered a jump in volatility over recent months, with investors wavering between exuberant optimism and despondency about the outcome.

China and the US agreed to a ceasefire in their trade war at the G20 Summit in Argentina at the end of November after high-level talks between U.S. President Donald Trump and Chinese President Xi Jinping, yet only 39% of the GIQ survey respondents believed this détente would signal the end of the spat even though the world’s two biggest energy importers had agreed to abandon plans to escalate tariffs on Jan. 1.

The OPEC+ agreement will extend through the first half of 2019 until the oil exporters group meets again in June. While six months may be enough to reduce the combined output of OPEC and its partners by the agreed 1.2 million bpd, if U.S. production continues to grow at the current rate, it would likely offset this cut completely.

U.S. production of shale oil, which has added 5 million barrels of oil to U.S. output over the last decade to move America onto a similar level as Saudi Arabia and Russia at around 11 million barrels a day, has put a consistent downward pressure on oil prices in recent years.

Chart Attribute: What will be the Average Price for Brent Crude Oil in 2019? / Source: Gulf Intelligence Research Q1 2019

Chart Attribute: What will be the Average Price for Brent Crude Oil in 2019? / Source: Gulf Intelligence Research Q1 2019