‘Forecast demand fall will push oil price down to $80 pb’ Kuwait oil price drops to $106 pb

KUWAIT CITY, Jan 1, (KUNA): Oil prices are forecast to range between $80 per barrel and $90 pb, largely due to fall of demand as compared to supplies. Oil expert Khaled Boudai told KUNA in an interview that the predicted decrease of the crude price would be as a result of fall of supplies of Iranian, Iraqi and Libyan oil, with the international economic blockade on Iran is forecast to ease off, Iraqi crude output would climb and Libyan crude exports would resume. Forecast rise of the oil supplies, in 2014, will range between 1.5 to two million barrels per day, thus a market glut is foreseen, simultaneously with prices’ fall. In case supplies decreased by more than one million bpd, the Brent oil price would be in the range of $90-100 pb, he said, adding that shale oil would not significantly affect the prices. Wide-scale output of shale oil is ruled out, said Boudai in the remarks to KUNA, also noting that cost of extraction of this type of oil is too high, $80-70 pb.

Nevertheless, Shale oil may develop greater influence on the market in five years’ time, with development of exploration and drilling technology, the Kuwaiti expert opined, adding that producers of this non-conventional crude aspire to limit the output cost to $40 pb to make this industry much more feasible. Boudai cautioned that the oil prices might jump higher than forecast if unpredictable dramatic events take place on the Middle East theatre. As to the 2013 prices, Boudai said the Brent crude price had been forecast to reach $95-105 pb, however it jumped higher by $5. Asked about the US success in increasing shale oil production, last year, by up to one million bpd, he acknowledged that the Americans did succeed in trimming dependence on oil exports, “however this was offset with demand hike in other parts of the world and that contributed to making the prices close the year with rise.” Shale oil won’t be influential on the crude market unless the producers succeed in trimming the cost of production to $40 pb, he affirmed, adding that its role would be minimal in case prices of the conventional oil drop.

For now, shale oil is benefiting from the high prices of the conventional oil, standing at $90 pb, he added further. Meanwhile, Kuwaiti Oil price dropped 78 cents to $106.64 pb on Tuesday compared to $107.42 pb the day before, said Kuwait Petroleum Corporation (KPC) in a statement on Tuesday. Forward contracts of the Brent crude slightly dropped in the London market, on the last day of the year 2013, lower by 31 cents from its 2012 level of $111.11 pb. Brent crude was affected with predicted resumption of Libyan oil exports, losing yesterday 41 cents thus ending the year at $110.80 pb, with a 0.3 percent loss during the year. Meanwhile, the American crude prices in New York market fell 87 cents closing at $98.42 pb compared to $91.82 pb in the end of the 2012 trades. The American crude oil ended the year 2013 rising by 7.2 percent, amid noticeable changes in the world largest oil market due to substantial hike of shale oil output.

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