EMEA News
Oil Slumps To Multi Week Lows, Norway Says Don't Expect $60 Crude Until 2019
This week has seen its share of positive speculation about what oil could do in the near term, but fundamentals combined with trading figures continue to suggest a bear market is rapidly developing, and one analyst thinks we'll soon see West Texas Intermediary fall below the $40 mark.
Crude fell 2 percent on Friday to multi-week lows over concern of swelling Iranian exports and because of falling U.S. equity markets and a rising dollar: Brent settled down 82 cents to $45.77 per barrel, and WTI futures fell 88 cents to $43.03 a barrel – the latter being a five-week low of $42.74.
Altogether this week, Brent and WTI fell 5 and 6 percent respectively.
Jim Ritterbusch, president of Ritterbusch & Associates, said, "Crude futures are taking on an increasingly bearish appearance," and with regards to WTI, "this can potentially expedite our expected trip south to the $39 area."
As for the longer term, the government of Norway – which is reporting weak economic growth in the latter half of this year instead of the standstill it has been suffering since 2014 as a result of the fall in oil prices – predicts that a price recovery to a modest $60 per barrel will not become the norm until the end of 2019.
For the record, Norway is hopeful that the anemic economic growth will be accompanied by some resumption of investment activity: Statistics Norway states in a new report on trends for the nation, "We assume that the decline in petroleum investments in terms of volume will be curbed considerably in 2017, and that the volume of investment will increase slightly in 2018 and 2019" (total investments in oil and gas extraction and pipeline transport for 2016 are estimated at just under $20 billion, a 1.5 percent decline from last year).
The one bright spot in Friday's news was gasoline surging 2 percent on outages on Colonial Pipeline's main gasoline line and in a key unit of BP Plc's refinery in Whiting, Indiana.
Despite overwhelming evidence to the contrary, some experts insist that the good times are closer than one might think: earlier this week, Barry Dawes, head of research for Paradigm Securities, said, "The demand for energy and supply is coming together ... we've seen transportation fuel in the last few years still rise in the double digits in China and India, so I'm pretty comfortable that the underlying demand is there."
Dawes also noted, in stark contrast to virtually every calculation that has been made about global output, that "this year, almost every month, OPEC members increased their demand numbers and also decreased their production numbers, so the oil balance I think is much closer than the IEA is suggesting."
