Yesterday, oil price was volatile after ECB’s meeting. Price rose 1.02% to $60.91/barrel, then ended the session at $59.57/barrel.
Currently, oil is trading at $ 59.43 / barrel, at 4:16 pm (GMT + 7).
Oil price is likely to fall because of the following reasons:
- Slowing demand and oversupply risk: The former head of OPEC’s research group – Hasan Qabazard said that brent will fall further later this year, due to increasing output from Iraq and Iran, shale oil output steady while demand is slowing. Mr. Hasan Qabazard said that Brent oil will trade between $40-50/barrel in the fourth quarter of 2015. The current oil price is quite attractive with the non-OPEC oil producers. According Qabazard, US shale oil production is stable at 4 million barrels per day (bpd), and will rise to 5 million bpd in 2018. OPEC member countries worsen oversupply: Many forecasts show that OPEC would maintain output.
However, oil price may still edge up because of the following reasons:
- Goldman Sachs said that the diesel consumption is rising in Europe my help oil price to increase.
- The Fed is unlikely to raise interest rates: Chicago Fed President said that obstacles in the journey to raise interest rates by the central bank was significant at the present time, and the fact the economy is not available ready for this, at least until early next year. Weaker dollar may support oil price.
- European economic outlook: ECB President Mario Draghi said at his press conference in Frankfurt yesterday that the QE is on track helping to boost Euro against dollar.
- Qatar oil minister indicated that demand is gradually improving, the market will slowly reach balance this year and price will soon rise.
Forecasting: Oil price may drop to $58.42/barrel.