Oil prices could drop to $70/barrel in short term - experts
TORONTO/LONDON. June 5. (Interfax) - WTI oil prices could fall to $70 per barrel in the short-term, especially if macroeconomic conditions continue to worsen, CIBC World Markets, part of Canadian Imperial Bank of Commerce, said on Monday.
Experts from Religare Capital Markets provide a more optimistic forecast. According to the British investment company, which specializes in investments in developing markets, WTI crude is likely to fall to $80/barrel by this September due to a short-term drop in demand caused by the European debt crisis, as well as due to slowing growth rates in the U.S. and Chinese economies, resulting in temporary oversupply. In these conditions, Brent crude could decline to $90/barrel.
However, by the end of the year, WTI and Brent are expected to return to $95 and $105, respectively, since demand will be restored and key players on the global energy market will refrain from reopening strategic reserves, while Iran and Iraq will prevent an increase in the Organization of Petroleum Exporting Countries' (OPEC) quotas.
During trade on June 1, Brent crude fell below the psychologically import price of $100/barrel for the first time since last October, reaching its lowest value since January 27, 2011.
By 11:51 a.m. Moscow time on Tuesday, Brent oil futures for July on London's ICE Futures exchange had fallen by $0.08 (0.08%) to $98.77/barrel.
Royal Dutch Shell plc CEO Peter Voser believes that the recent drop in WTI crude to an eight-month low of $81/barrel was caused exclusively by short-term fears over Europe's debt crisis and an overall deterioration in macroeconomic conditions.
Voser is convinced that there is no threat of a repeat of the 2008 oil price collapse, since the fundamental supply-demand relationship has not changed in the long-term, and prospective rates of growth in supplies will continue to lag behind increases in demand for fuel.
In 2008, WTI crude plummeted from $147.27/barrel in July to $32.4/barrel in December. Last month, this type of oil fell by 17%, the biggest drop it had seen since December 2008.
By 11:51 a.m. Moscow time, July futures contracts for WTI crude on e-trading on the New York Mercantile Exchange (NYMEX) had risen by $0.24 (0.29%) over June 4 to $84.22/barrel.