Oil prices have reached ‘bottom’ but to remain below $100 for next few years

Oil prices are unlikely to fall further after a plunge of nearly 60 percent since June, Iraqi Oil Minister Adel Abdul Mahdi said on Wednesday.

“Our estimate is that the prices have reached the bottom. It is very difficult to drop lower than this,” Abdul Mahdi told a conference in Kuwait.

“We do not find any real justification for the big and persistent drop in oil prices,” the Iraqi minister said. “A number of factors will work to correct oil prices upward.”

However, the chief executive of state oil company Kuwait Petroleum Corp, Nizar Al-Adsani, said at an energy industry conference on Wednesday that he believed oil prices would remain below $100 a barrel for the next few years.

The country's oil minister, Ali Al-Omair, told the same conference that Kuwait would nevertheless continue developing its production and refining capacity.

“Despite the atmosphere of falling oil prices, we in Kuwait are determined to expedite finalizing the big oil projects...” Omair said, adding that the country planned to spend $100 billion in the next five years on such projects.

Kuwait has a long-term plan to boost its crude oil production capacity to 4 million barrels per day by 2020  from around 3.15 million bpd now. Adsani said the country had the ability to reach 3.5 million bpd of capacity by the end of 2015.

Brent crude oil edged above $48 a barrel on Wednesday, consolidating after a drop in the previous session, although oversupply and the prospect of inventory rises make further weakness likely.

Prices fell on Tuesday after the International Monetary Fund cut its 2015 global economic forecast and OPEC member Iran hinted at further price weakness.

Brent rose 47 cents to $48.46 a barrel by 1200 GMT. US benchmark West Texas Intermediate for March delivery was up 44 cents at $46.91 in afternoon trade. The February contract expired on Tuesday at $46.39, down $2.30 from the day before and not far from its lowest level since March 2009.

Prices are consolidating before Thursday's expected launch of a bond buying stimulus program by the European Central Bank, said Kash Kamal, an analyst at Sucden Financial.

"If you look at the $60 per barrel mark or $70 or $80, we stop at these psychological levels, consolidate for a while, wait for the next big macro data point to come out and then decide from there," said Kamal. "I do believe it still has some way to go on the downside."

 In a strategy shift, the Organization of the Petroleum Exporting Countries decided last year against cutting its supply and is betting the drop in prices will curb the growth of more costly-to-produce competing sources, such as US shale oil.

The price collapse is starting to slow growth in US output, according to OPEC, and prompting investment cuts. The head of France's Total said he had ordered the company to limit US shale spending.

Still, OPEC's own forecasts point to a surplus in 2015, leaving an excess for inventories to absorb.

"We see little scope for avoiding a large stock build in the first half of 2015 and therefore anticipate weak prices," analysts at BNP Paribas said in a report.

The latest weekly snapshot of supplies in the United States is due on Wednesday. Crude stocks are expected to rise by 2.6 million barrels. Brent fell almost 50 percent in 2014 in its biggest annual drop since 2008, pressured by weakening demand and a supply glut