Oil prices could rebound by end of year, according to experts

FORT ST. JOHN, B.C. — The price of crude oil has again dipped below $30/barrel U.S. this week, leading to the quick disappearance of last week’s hope for a rally — but Bloomberg Business has published a report suggesting, by the end of this year prices could rebound to between $45-50/barrel.

It says, according to the Goldman Sachs Group, the global surplus which fueled the more than 70 per cent price drop in the last 18 months, is expected to shift to deficit as U.S. shale output falls.

It also says the U.S. Energy Information Administration expects U.S. production to drop by 62,000 barrels a day, or about seven per cent, from the first to fourth quarters, and it says the International Energy Agency, puts at 600,000 barrels, a day a forecast drop this year in non-OPEC supply.

Iraq — the second biggest producer in OPEC behind Saudi Arabia — is predicting the price this year could rise to $50 a barrel and the United Arab Emirates sees the global glut shrinking, even if Iran follows through with an anticipated export boost after sanctions are lifted as part of the controversial nuclear accord driven by the Obama administration in the U.S. and sanctioned by the U.N.

The story goes on to suggest that might set the stage for a rebound as lower prices have stimulated global demand, with Citigroup suggesting “Oil is the trade of the year.”

Analysts, including Jeff Currie of Goldman Sachs, said in a report last month the oil price rout will shut sufficient production to erode the global glut and crude will turn into a new bull market before the year is out.

Phillip Futures, based in Singapore, is on the same page, suggesting there are bullish demand forecasts for the second half of the year, and U.S. shale should take the primary hit when it comes to cuts and a tapering off of supply.