Oil prices and the next meeting of Algeria

Oil prices and the next meeting of Algeria

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High oil inventories and fears of demand and  the slowdown in the global economy  are still the most important issues that constitute a criterion  on oil prices And increase the oil market challenges.

The most important thing  dominates the market in general is  the state of uncertainty associated as  we mentioned earlier  with oversupply and falling of the  demand  that it  is  still continuing  to dominate the direction of prices and its  expectations  after the year 2016,  noting that the oil market  today witnesses   a state of tension between the producers  that everyone is trying to maintain its market share.

oil prices witnessed  arise on the prices   after news of an informal meeting ,  to discuss solutions to the crisis of supply ,  it is to be  held by members of the Organization of Petroleum Exporting Countries (OPEC) on the sidelines of an energy forum in Algeria between 26 and 28  September.

The announcement was followed by the global rise in the price of Brent blend by about 3% to $ 45.40 a barrel, as US crude has increased by a similar amount to $ 42.90.

But crude prices  are declined again  to $ 42 after data issued   last week from  the American Petroleum institute   that the  stocks of the United States  are increased  by 2.09 million barrels last week   to reach  520.8 million barrels and  stocks of the United States of America in Cushing, Oklahoma rose to  1.3 million barrels.

The Institute also reported that the  gasoline stocks was  declined  by 3.9 million barrels despite the fact that expectations were referring to a decline of 1.1 million barrels.

According to OPEC data , the total  of  global  business  strategy  oil inventories  on the market reached 8842 million barrels   at the end of 2015, with arise  by 750 million barrels, compared to the same period in 2014.

The expectations of the World Bank

A lot of analyzes addressed the volatility in the oil market, but the global economy and fears of demand as well as higher volume of supply and its impact on crude prices were the strongest present in these analyzes.

Here, the World Bank sees in his report on oil prices and trends over the next five years that despite the stability of oil prices above forty dollars per barrel since the beginning of 2016 and the high expectations that prices are seeing more improvement in the coming period, particularly after prices tested the fifty  dollars levels , but the  ambiguity of  global economic climate still controls the direction of prices and expectations of the post-2016

The Bank report  was more pessimistic  on raw materials prices after it confirmed that the black gold prices will not exceed the level of $ 60 per barrel until 2020.

Going back to talk about the next OPEC meeting to freeze the production, it may be a consultative meeting on mostly, Saudi Arabia, OPEC’s largest producer, had put a condition in the OPEC meeting in Doha, the need for  the participation of all parties in the freeze, which was rejected by Iran, and  Saudi Arabia may stick  to its condition   in the  meeting in Algeria, so it  is likely that the meeting will  meet the fate of its predecessor.

 

Today the price of oil witness a clear fluctuations  based on market factors and uncertainties about global economic growth, and despite to  talk of holding   an informal meeting of OPEC at the end of the next September , but the reality of the market does not refer to the possibility of taking important decisions during the meeting,  noting that the market  today may not be ready for  the decision to freeze the production ceiling, and especially since the market today still live price war amid a state of anticipation and caution from a lack of supplies.

Amer Al-Amran

Translated by : Mudhaffar Alkusairi

Rawabet Center for  Research and Strategic Studies