Baku, Azerbaijan, Jan.9
By Leman Zeynalova – Trend:
Oil prices are expected to pullback by at least 15 percent over the coming months, Eugen Weinberg, head of commodities research at Commerzbank believes.
The oil price rally is definitely due to massive overheating of the speculators and is likely to correct over the next month, he told CNBC.
"I expect the price of oil to correct by at least 10 to 15 percent over the coming months because the current fundamentals are not justifying this kind of strength," added Weinberg.
Oil prices rose to their highest levels since mid-2015 on Jan.3 amid political unrest in Iran. Iran saw turmoil and political unrests over the past weeks, which took the lives of at least 22, including security forces.
The unrests began after some groups joined demonstrations in a number of cities, including the capital Tehran, Mashhad and Kermanshah to protest against high prices, but the economic protests soon turned into anti-government demonstrations.
UK-based consulting company Capital Economics, for its part, said in its report that in addition to political unrest in Iran, higher oil prices have been supported by temporary disruptions to the oil supply from the North Sea and Libya and higher demand due to unusually-cold winters in large energy-consuming economies.
“This recent weather-related boost to consumption follows months of stronger demand pushing oil prices higher, particularly in China,” said the company.
Moreover, Capital Economics analysts believe the signs that OPEC compliance with quotas is slipping combined with a continued strong rise in US shale production are perhaps two reasons why investors expect the price of Brent crude to fall back.
---
Follow the author on Twitter: @Lyaman_Zeyn
