After the deep downturn, the oil industry is seeing the light but is it the end of the tunnel? And can the oil prices recovery be maintained?
Some analysts don’t agree, believing that the low of $27 a barrel for Brent reached in February established a firm bottom for the market. According to an article recently released by The Week, “Oil stockpiles are at record highs and a deal to freeze supplies would only entrench, for the time being at least, excess exports of one to two million barrels a day”.
In spite of these speculations, Martin King, a commodity analyst with Calgary-based First Energy Capital, told the Edmonton Journal that “Traders do seem to be looking through the current high inventory levels and prices just keep marching higher”. He says prices may not hold at current highs in the short-term, but that they will not now go lower than $30 a barrel and will move up over the next year or so.
"On a 12 to 18-month view, oil prices should normalise back to the marginal cost of supply of at least $60," agreed Michael Hulme, a fund manager at Carmignac Gestion, the French investment group, in comments to The Times. Oil producers have agreed to meet in Doha, Qatar, in around a month's time to discuss a freeze in production at January levels. Around 15 suppliers making up close to three-quarters of global output are signed up to the initiative.
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