A senior executive from shipping major Maersk has joined the chorus of bearish oil price predictions following OPEC+’s decision last Sunday to extend their production hikes for another month.
“I think there’s a high risk to the downside for sure when it comes to kind of overall global balances,” Emma Mazhari, chief executive of oil trading at the Danish company. She added that oil demand was growing weakly, which would contribute to the imbalance with supply.
Mazhari made her prediction at the Asia Pacific Petroleum Conference, which kicked off on Monday in Singapore, following similar predictions by Goldman Sachs and S&P Global, the organizer of the event.
Oil prices, however, have stabilized around $66 for Brent crude and $62.50 for West Texas Intermediate.
Goldman said it expected a supply overhang of as much as 1.9 million barrels daily next year to push Brent crude down all the way to $55 per barrel. The bank noted, however, that OPEC+ may refrain from bringing back all the barrels it says it will bring back. It also noted that the price forecast depended on an assumption of a rebound in OECD oil inventories, which have been trending over 100 million barrels below the five-year average this year.
Also at the APPEC conference, Dave Ernsberger, co-president of S&P Global Commodity Insights, said that “If there’s a massive surplus, if Russian oil continues to flow into the market, if stock-building stops and some of this stuff goes into commercial inventory, contangos blow out, we can see a lower price than that.”
This is a rather conditional forecast, which may go some way towards explaining why oil prices actually brushed aside the news of another monthly hike from OPEC+. Supply security appears to be more precarious than assumed by many analysts, hence the seemingly counterintuitive reaction of oil traders at the news.
By Irina Slav for Oilprice.com
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