Brent crude oil prices are expected to be traded between $ 60 and $ 70 a barrel by the second half of this year, unless a global economic slowdown dampens prospects for global oil demand, APICORP said. .
Following Brent Crude's $ 85 four-year highs in October, the international benchmark fell to just $ 54 by the end of 2018. The main reasons were worries about the global economy, increased production in the three largest oil producers – USA (APICORP), a multilateral development bank set up in 1975 under an agreement signed by the ten member states of the Organization of Arab Petroleum Exporting Countries (OAPEC).
The collective cutting of 1.2 million barrels per day of OPEC and its non-OPEC partners led by Russia may not be enough, APICORP warned, but noted that "The oil price dynamics in 2019 will also depend on large part of OPEC's effectiveness. in the implementation of the cuts, balancing the market and reinforcing the credibility of its signals. "
"While OPEC is expected to cut production by 2019 in an attempt to balance the market, US output is expected to keep pace," it said.
According to APICORP, the pace of global oil demand will be more important for oil prices than the supply side of the market.
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"According to recent OIES research, stronger than expected oil demand growth accounted for 80 percent of the market rebalancing, and therefore any slowdown in the global economy that results in lower demand growth will have a drastic effect in oil prices. And concerns about the global economy are increasing, "APICORP said.
"In conclusion, purely based on fundamentals, a collective cut of 1.2 mb / d between OPEC and its allies, high probability of supply losses from Iran, Venezuela, Libya and Canada, and global demand growth of 1.4 million / d, the market will reach equilibrium in 2019. "
Oil prices will remain under pressure until the market begins to show signs of falling stocks, according to APICORP.
"OPEC's main challenge will be to address the physical imbalances in the market and assert its credibility to consistently manage expectations and sentiment," the bank said.
By Tsvetana Paraskova for Oilprice.com
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