Analysts do not believe in the real production cuts and hope for increase in demand
Oil prices will go up, despite the OPEC agreement to reduce output by 1.2 million barrels a day. World’s largest banks have predicted a decline in production and rising prices for Brent to average $70 per barrel, Bloomberg predicted in his pre-Christmas research. Noting the recent failure of prices before the New year to $53,50 after the average value in 2018 to $72.
“We could even see something similar to the V-shaped recovery next year when two very important conditions. First, reducing OPEC exports leads to a reduction in reserves. And second, we do not see further deterioration of macroeconomic conditions”, — commented the head of research in the field of energy and commodities at Barclays Plc Michael Cohen.
In the absence of a serious economic downturn, most analysts expect global oil consumption will continue to grow at roughly the same pace as in recent years. Mainly due to developing countries such as China. However analysts doubt that OPEC actually will cut production of oil.
In such a situation, analysts at Morgan Stanley and Standard Chartered Plc, for example, predicting oil at $78 per barrel.
“The volume of production announced by OPEC + is probably sufficient to balance the market in the first half of 2019 and prevent a buildup of reserves”, — said the managing Director of Morgan Stanley’s Martijn rats.
The experts calculated that in 2019, oil production in the U.S. will grow to 12.06 million barrels — more than the other two major world producers, such as Saudi Arabia and Russia.