Responders throw oil booms into the Kanawha River near Mount Carbon, West Virginia. With the US producing record oil, politicians from oil rich North Dakota say the export ban should be lifted. Image Credit: Reuters

Abu Dhabi: Global oil prices, enjoying a slight rebound following last year’s plummet, are set to dive again, according to a former Whitehouse energy adviser.

Global benchmark Brent crude closed trading at $60 a barrel on Friday while US crude closed at $50; both had touched $45 last month after losing around half their value in the second half of 2014.

Bob McNally, founder and president at Rapidan Group and a former energy adviser to the George W. Bush administration, told Gulf News by email “oil prices will fall sharply into the summer” due to excess supply on the market.

“The year began with some unexpected fundamental tightness due partially to a sharp drop in Iraqi loadings due to rough weather, the loss of Libyan supply, and winter-driven demand. But these factors should either reverse or be overtaken by mounting storage builds,” he said.

Oil prices began their descent last June because of a global glut driven by weak demand out of the world’s second largest economy, China, and increasing domestic production in the US.

Sustained weak oil prices could have significant repercussions on the global market. Oil producing states from the Organisation of Petroleum Exporting Countries (Opec), which produces around a third of the world’s oil, rely on oil revenues to stack government coffers and fund investment projects.

Saudi Arabia, the United Arab Emirates, Kuwait and Qatar are all Opec members.

It also can impact US production which relies on expensive technology to extract shale oil from hard to reach rocks deep underground in a process called “fracking.” The low oil prices have shut down rigs in shale producing state North Dakota but production remained steady at 1.2 million barrels a day in January, according to oil data firm plats.

“Crude oil’s rebound was due to short covering by speculators as well as buying by some traders and investors who interpreted recent headlines about large cuts in capital expenditures and drilling rig counts by US shale oil producers,” said McNally.

“Buyers believe that these company announcements signal a sufficient supply response to low prices and are sufficient to put a bottom in crude prices, which are expected to bounce back toward the $70 range in coming quarters. Fundamental analysts, by contrast, believe it is too soon to expect a bottoming in oil prices,” he added.