Brent crude took a further tumble on Monday after another major forecaster cut its price expectations for next year, adding to the bearish sentiment for oil markets.
The investment bank Morgan Stanley slashed its outlook and offered a worst-case scenario of the benchmark falling as low as US$43 a barrel in the second quarter.
It revised its earlier estimate for next year to $70 a barrel from $98 and lowered its 2016 outlook to $88 a barrel from $102.
Brent for January settlement declined as much as $2.30 to $66.77 a barrel on the London-based ICE Futures Europe exchange on Monday, the lowest intraday price in more than five years. It slumped 18 per cent last month, a fifth straight decline.
Industry experts expect oil prices to remain below $70 as the battle for market share between US producers and Saudi Arabia continues to take centre stage. BNP Paribas, Credit Suisse, UBS and Barclays have all cut their forecasts since Opec’s meeting last month when it maintained output amid oversupply.
The head of Kuwait’s state oil company said there was no likelihood of a rebound any time soon, forecasting prices to remain around $65 a barrel.
“I think oil prices will remain at these levels for the next six to seven months,” Nizar Al Adsani said. The chief executive added, ahead of Opec releasing its monthly report tomorrow, that prices would not increase barring fresh political crises, a change in Opec production policy or until concerns eased over the world’s economic recovery.
Opec’s market update will be followed by the International Energy Agency’s (IEA) report, collectively setting the tone for energy markets in the new year.
They are expected to reveal how much the 12-member group is actually producing after it decided to maintain official output levels at 30 million barrels per day (bpd), around 1 million bpd more than global demand for its oil.
The group pumped 30.56 million bpd in November, exceeding its quota of 30 million for a sixth straight month, according to estimates compiled by Bloomberg.
Last month the IEA, in a rare move, predicted a further drop in oil prices.
“While there has been some speculation that the high cost of unconventional oil production might set a new equilibrium for Brent prices in the $80 to $90 range, supply and demand balances suggest that the price route has yet to run its course,” the IEA said.
It added that lower Chinese economic growth and US shale output could result in prices falling further in the upcoming year.
“A well supplied oil market in the short term should not disguise the challenges that lie ahead, as the world is set to rely more heavily on a relatively small number of producing countries,” said the IEA chief economist Fatih Birol.
Meanwhile the US shows no signs of cutting back its shale oil production, which has increased by 3.6 million barrels a day over the past four years. Recently released rig count numbers in the US show the first gain in three weeks to a total of 1,575, defying predictions of a drilling slowdown, according to Baker Hughes.
lgraves@thenational.ae
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Company%20Profile
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EXPATS
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ETFs explained
Exhchange traded funds are bought and sold like shares, but operate as index-tracking funds, passively following their chosen indices, such as the S&P 500, FTSE 100 and the FTSE All World, plus a vast range of smaller exchanges and commodities, such as gold, silver, copper sugar, coffee and oil.
ETFs have zero upfront fees and annual charges as low as 0.07 per cent a year, which means you get to keep more of your returns, as actively managed funds can charge as much as 1.5 per cent a year.
There are thousands to choose from, with the five biggest providers BlackRock’s iShares range, Vanguard, State Street Global Advisors SPDR ETFs, Deutsche Bank AWM X-trackers and Invesco PowerShares.
The Perfect Couple
Starring: Nicole Kidman, Liev Schreiber, Jack Reynor
Creator: Jenna Lamia
Rating: 3/5
How green is the expo nursery?
Some 400,000 shrubs and 13,000 trees in the on-site nursery
An additional 450,000 shrubs and 4,000 trees to be delivered in the months leading up to the expo
Ghaf, date palm, acacia arabica, acacia tortilis, vitex or sage, techoma and the salvadora are just some heat tolerant native plants in the nursery
Approximately 340 species of shrubs and trees selected for diverse landscape
The nursery team works exclusively with organic fertilisers and pesticides
All shrubs and trees supplied by Dubai Municipality
Most sourced from farms, nurseries across the country
Plants and trees are re-potted when they arrive at nursery to give them room to grow
Some mature trees are in open areas or planted within the expo site
Green waste is recycled as compost
Treated sewage effluent supplied by Dubai Municipality is used to meet the majority of the nursery’s irrigation needs
Construction workforce peaked at 40,000 workers
About 65,000 people have signed up to volunteer
Main themes of expo is ‘Connecting Minds, Creating the Future’ and three subthemes of opportunity, mobility and sustainability.
Expo 2020 Dubai to open in October 2020 and run for six months
COMPANY%20PROFILE
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Where to submit a sample
Volunteers of all ages can submit DNA samples at centres across Abu Dhabi, including: Abu Dhabi National Exhibition Centre (Adnec), Biogenix Labs in Masdar City, NMC Royal Hospital in Khalifa City, NMC Royal Medical Centre, Abu Dhabi, NMC Royal Women's Hospital, Bareen International Hospital, Al Towayya in Al Ain, NMC Specialty Hospital, Al Ain