Weak Dollar behind oil price hike last week - Al-Shatti
A Kuwaiti oil analyst believed that weakness of US dollar was the main driver of the rise in oil prices over the last week, prompted by the production being affected in a number of areas.
Mohammad Al-Shatti told KUNA on Tuesday that the market will be anticipating OPEC's announcement of production estimates, which generally will contribute to the price path, pointing to a recovery in crude oil prices of Brent that reached record levels and that they are poised to rise according to technical factors.
Al-Shatti added that market fundamentals are relatively strong at the moment, "therefore, the prices are strong and I think, as many observers anticipate them falling and being subjected to volatility when the main factors that promote the rise are over, therefore, sustaining Brent crude oil prices around USD 40 pb during the coming months, but maintain Brent at the level of USD 50 would seem likely to occur between next October till December 2016." He said that the fall in Brent crude oil prices to low levels early in 2016 is the real motive behind the producers' move for consensus to reach an agreement to stabilize production.
He added that almost 80 percent of oil production in Russia can be commercially or economically when oil prices of crude are at USD 20 a barrel.
Al-Shatti said that the reluctance of Russia to abide by an international agreement on production control throughout 2014 and 2015 when OPEC required that is due to the high price levels during that period, but the decline in Russian oil prices to below USD 25 a barrel in January 2016 encouraged Moscow to join international efforts with Saudi Arabia, Venezuela and Qatar to conclude an agreement to adjust the supply.
He pointed out that according to credible reports, Russia has lost as a result of falling prices USD 26 billion in 2015 and began to actually look at the mechanisms to assist it stabilize and support oil prices and alleviate the suffering of the Russian oil and gas industry by raising taxes.