Dubai: With oil prices plunging into bear territory — having fallen over 20 per cent from recent highs — S&P Global Platts expects to see a slow rise in prices going into 2019.
Martin Fraenkel, president of S&P Global Platts, an information provider in the areas of energy and commodities, said that demand for oil remains “reasonable,” adding that he expects to see continued growth in demand over the next years.
“I think what we feel is that going into next year, prices can cautiously rise, but we don’t think we’re in a super-bull environment,” he told Gulf News in an interview.
Fraenkel said that rise is likely to be of “some dollars a barrel, but not tens and tens of dollars a barrel.”
Oil prices recorded a sixth weekly loss last week, plunging from a four-year high in October, after the US granted exemptions to Iran to export oil to certain jurisdictions and amid woes on demand outlook.
“Demand has been very strong for the last three years. Demand for oil has this year exceeded for the first time a hundred million barrels per day, and it looks like 2018 is going to end up being a reasonably strong year for the demand side,” Fraenkel said.
“I would say that in the current global macroeconomic climate, demand for oil remains pretty reasonable and that we should expect to see continued growth in oil demand over the next several years.”
He, however, pointed out that this demand will depend on global economic growth rates, and whether they manage to remain strong in 2019.
The Organisation of Petroleum Exporting Countries (Opec) in its latest reports has been revising down demand forecasts for 2018 and 2019 amid slower-than-expected performance this year.
And it’s not just concerns on slower demand that are hurting oil prices.
Growing production from the United States, as well as exemptions that allow Iran to continue exporting oil after sanctions were imposed, are contributing to an oversupply in the market.
Fraenkel said that US oil is not just here to stay, but is expected to grow.
“The US production continues to grow. It’s probably going to be [at a] record or near record levels this year. There’s no question that US exports are now a feature on global crude oil markets,” he said.
“We’re seeing US crude coming to Europe as well as Asia... so this phenomenon of US crude being exported around the world is here to stay, and we think will continue to grow in the next years.”