According to Saudi prince and nation’s deputy oil minister, oil bears are likely to be proven wrong. The Prince sighted $200/barrel forecast, suggesting similar is in store for the oil bears and doom sayers.
According to many analysts, there has been a structural shift in oil market, which will lead prices lower or keep it low for longer. According to the Prince, today’s lower oil price has led to significant cut in investment in the sector, effect of which would be long lasting and make the price vulnerable to shocks.
Price of Brent benchmark touched lowest level of $42/barrel area since 2009 and hasn’t made any further lows since August, however bulls have each time have been countered by heavier selling pressure at every rallies.
Moreover, weakness in China has hindered growth in emerging markets and hindered greater demand, whereas lower prices has provided support.
This year, demand is set to rise 1.8 million barrels/day but supply/demand gap is still large enough close to 2 million barrels/day.
Brent crude is currently trading at $47.9/barrel.
The material has been provided by InstaForex Company – www.instaforex.com