Dubai: Brent crude prices may fall further this year due to lower global demand and ample supplies, even though the current prices are at a reasonable level, analysts said.

“We don’t expect prices going back up. We don’t see a strong demand going forward. We have seen sluggish demand in the US and even China is decelerating,” said Camille Accad, economist at Asiya Investments, an Asia focused Investment Company.

The Brent crude is currently trading at around $96 a barrel. The outlook is very negative and Brent may reach a level of $90 in the fourth quarter, said Osama Al Ashri, a member of the British organisation, Society of Technical Analysts.

Prices may trade in the range of $87-$92, Al Ashri said, adding the Brent crude has been rising since March 2009.

Higher exports from Libya and booming US production “deepened the overhang in crude markets and overshadowed any lingering worries of potential output disruptions in Iraq,” the International Energy Agency said in a monthly report on September 11.

Libya’s oil output rose to 925,000 barrels a day from 900,000, National Oil Corp. spokesman Mohammad Al Harari said yesterday. Libya is working to restore crude output after a year of unrest reduced it to the smallest producer in the Organisation of Petroleum Exporting Countries. Ample supplies of crude may also continue to come in from Angola, Nigeria and Iraq, analysts said.

Upside risk

The major upside risk for the crude oil prices is spreading of geo-political tensions, analysts said.

The US-Arab coalition is seeking to rein in militants who have rampaged through Syria and threatened to ignite a civil war in Iraq. Oil reserves in Iraq are considered as the world’s fifth-largest proven oil reserves.

“The areas that are most affected from the US intervention are non-oil areas. However, the major upside risk is spreading of the geo-political tensions in the Mena (Middle East and North Africa) region. The probability of this happening is much lower,” said Accad.

He said there could be an impact on the economies of the GCC countries if crude oil prices fall below $40 per barrel. “In that case, these countries will have to depend on ample reserves accumulated from surpluses from previous years,” Accad said.