Volumes rising

Oil prices have slumped 40 per cent since Opec embarked on a strategy last November to keep pumping and drive out higher-cost competitors.

Meanwhile, Opec is displaying hardened resolve to maintain sales volumes even as prices fall in an oversupplied market, the IEA said Friday in its monthly report. ceiling in an already oversupplied market. Analysts still see more downside for time being.

“Towards the end of the year, we would see more volatility, and downside in crude. The tilt of the market is so negative on that it is hard to find out any positive catalyst to this market to support any kind of even small rally,” Edward Bell, commodities analyst at Emirates NBD, adding “there are so many headwinds on the policy side, fundamental side and on the side.”

“The low oil prices that we have experienced over the course of 2015 has done a lot of damage and a lot of oil producers would be going into a phase of rebalancing in 2016. Overall we see a much tighter balance, but still probably in a surplus. But that said we would be a tighter position than this year, so prices would start to rise,” said Bell.

For 2016, Emirates NBD has an average forecast of $55 per barrel, up nearly 45 per cent from the current levels.

Mark Haefele, Global Chief Investment Officer Wealth Management at UBS, the world’s biggest wealth managers, also feels that crude may retest levels of $55 per barrel in another six months or so.

“We believe the current market surplus should largely clear by the second half of 2016. As market participants realise, the market will become nearly balanced, with room for a deficit at the end of 2016 and in 2017,” Haefele said in his 2016 investment outlook.

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