According to Kuwaiti analyst, Mohamed Al-Shatti, oil prices will not drop below $100 per barrel in the coming period. In fact, he said, oil prices may flirt with a $110 ceiling per barrel.
“My estimations are based on many factors, the most important of which is seasonal as demand for heating oil will increase significantly during this winter”, Al-Shatti said.
He added that this seasonal high oil demand comes in the midst of a drop in fuel oil reserves in Europe and the US, along with fears surrounding the rise in tension from Iran’s nuclear program. “Any attacks on Iran could affect oil supplies” he stated.
He downplayed the effects of the sovereign debt crises in Italy and Greece due to immediate and serious attempts to resolve the crises.
Another factor which led to the rise in oil prices is the weak supply of light crude. Light crude is in high demand during winter, however North Sea oil rigs, which provide the world with Brent Crude, continue to witness spills, as recently as last August.
Al-Shatti added that indications of China’s dropping inflation rates would enhance prospects of the world’s second largest economy achieving higher growth, thus leading to higher oil demand.
The Asian continent, he added, was a ruling factor at the current stage, in relation to its increasing demand for crude. China’s largest refinery plans to increase its consumption of oil in order to meet the country’s Diesel fuel needs.
During their coming meeting in Vienna in December, OPEC ministers are expected to evaluate oil market outlooks for the first quarter of 2012. (Source: www.yallafinance.com )