Baku, Azerbaijan, Nov.20
By Leman Zeynalova – Trend:
Brent oil has slumped into a bear market and may struggle to regain ground, Joseph Gatdula Head of Oil & Gas Analysis, Fitch Solutions Macro Research (a unit of Fitch Group) told Trend.
He pointed out that Brent is oversold and should reverse, but weak market sentiment will cap any gains.
The softened US’ approach towards Iranian oil has removed the key supply-side threat to prices, the analysts believes.
“Demand-side risks are back in focus and will continue to fuel the market bears. In our view, demand concerns are overblown; although global growth is slowing, demand remains relatively robust,” said Gatdula.
“Supply is looser than we had anticipated, but the market is not in glut. Outage levels are historically low and there is little slack left globally. This is not being adequately reflected in the price.”
Earlier, the International Energy Agency said in its Oil Market Report that global oil supplies are growing rapidly, as record output from Saudi Arabia, Russia and the US more than offsets declines from Iran and Venezuela.
‘October output was up 2.6 million barrels per day (mb/d) on a year ago. Non-OPEC output will grow by 2.4 mb/d this year and 1.9 mb/d in 2019,” said the report.
“Today, the Big Three, Russia, Saudi Arabia and the United States, all see output at record levels. Total non-OPEC production in August, the latest month for which we have consolidated data, was 3.5 mb/d higher than a year ago, with the United States contributing an extraordinary 3.0 mb/d. Russia's crude output has hit a new record of 11.4 mb/d, with companies suggesting that they could produce even more.”
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