Baku. 29 September. REPORT.AZ/ Decision by Organization of Petroleum Exporting Countries - OPEC to reduce production in November 2016, has caused rise in the price of oil by 7% in the world market.
Analytical Group of Report believes, even if an agreement reached among the OPEC member countries, the oil pricenot seem to exceed 55 USD / barrel.The reason is in parallel with the raise in the price of oil, shale oil production increased in US.
Thus, in January 2016, after the drop in market price of oil to 27 USD / barrel and then subsequent rise in last 17 weeks with the exception of 2 the number of active oil wells increased by 32.3% and reached 418 in US.
This shows that oil price at 50 USD / barrel will further intensify shale oil production.
In addition, in Algerian summit OPEC members, decided to cut production by a total of 250-750 thousand barrels per day. This in turn is less in order to restore the balance in the oil market.
Summit decided not to touch oil production quota of countries such as Libya and Nigeria. This two countries have the potential to increase production up to 1.6 mln barrels / day. Moreover, member states often do not comply with the production quota set by OPEC.
Another factor that will prevent the rise of oil is global oil demand forecast in 2017.
International financial organizations forecast daily growth forecast to fall from 1.4 mln to 1.2 mln barrels next year.
Reduction in global economic growth forecast shows oil demand may decrease further.
Analytical Group of Report believes, Brent crude oil may rise to a maximum of 55 USD / barrel in commodity markets. A gradual reduction in the price and formation in level of 30-40 USD / barrel assumed. In the event of negative processes in world economy, particularly in China, the price may fall to below 30 USD / barrel Thus, financial markets are now waiting for the results of the US presidential elections.
In case of the election of the Republican candidate Donald Tramp oil prices will sharply fall. The reason for this is 45% tariff on Chinese exports to the US. If this happens slowdown in China's economy which is the world's largest oil importer will be accelerated and oil demand fall sharply.