Dubai: Oil prices are expected to remain stable even as rising levels of US shale oil increase.
That a significant change from last year, when Brent crude traded in the range of $25-$70 per barrel. This year the fluxuations have been limited, with the range of staying in the area of $50-57. Experts say that will continue.
“We expect that the period of low volatility for oil prices and trading in a tight price range to remain in place for the short term,” Vaqar Zuberi, Head of Research — Hedge Funds / Portfolio Manager — Multi Manager Funds at Mirabaud Asset Management told Gulf News.
Oil prices have more than doubled from a low of $28 per barrel in January of 2016 on signs that supply glut has been curtailed.
“The oil market is expected to remain in balance for the first half of 2017 as the countervailing forces of increased shale oil production in the United States are weighed against an extended term of cuts in non-US production,” said Zuberi.
Drillers added six oil rigs in the week to Feb. 17, bringing the total count up to 597, the most rigs since October 2015, energy services firm Baker Hughes Inc said. During the same week a year ago, there were 413 active oil rigs.
“For the upside, we need a demand shock and the for the downside we need supply shock for crude to break the current range,” Aslam said.
On Friday, Brent crude closed almost steady at $55.81 per barrel, while the West Texas Intermediate was at $53.37 per barrel, up 0.07 per cent.
A cut in production by Opec members has been supporting oil prices, which has been in line with the agreement reached by Opec and non-Opec members last November to cut output by over 1.8 million of barrels per day to prop up prices. So far, there has been more than 90 per cent compliance to the deal.
“Traders are paying attention to how Opec has been able to curb the supply, and they are willing to do what it takes to curb the supply. Also Russia is very much backing up the Opec,” Naeem Aslam, chief market analyst with Think Markets said.
