Cairo- U.S. data played a crucial role in determining oil prices during last week’s sessions and is expected to play a similar role next week.
This week, the U.S. drillers added three new oil rigs for a fifth consecutive week, bringing the total rig count up to 374 compared with 664 a year ago.
Oil prices were boosted by the drop in exchange rate of the U.S. Dollar to its lowest rate in three weeks; this drop makes oil cheaper with regards to foreign currencies holders. The slump was a direct result of the U.S. data that revealed a slow economy growth, even slower than second quarter of 2016.
Gross domestic product, GDP, grew an annual rate of 1.2% in second quarter compared with analysts’ forecasts of 2.6% increase, according to data published by U.S. Department of Commerce.
“No surprise if by the end of 2017 prices went up to 65-75 USD/barrel.
Even a USD80/barrel is likely by 2018”, Director for Economic research at EFG Hermes told Asharq Al-Awsat. He attributed these forecasts to a decline in research and discovery activities up to 50% since the drop of oil prices, excluding the U.S. and Organization of the Petroleum Exporting Countries (OPEC).
In a survey carried out by Reuters, it showed that oil markets’ analysts did not lose hope in the increase of oil prices in 2016, supported by a growth in demand which will resolve the issue of the crude oil surplus.
A glance on current oil markets reports that the world supply of crude oil exceeds the demand with up to 1.5 million barrels per day. However, stumbled production in some troubled countries helped reduce the surplus such as in Nigeria, Libya and Venezuela.
In Libya, the National Oil Corporation (NOC) revealed that latest ISIS attacks made it difficult for ports to exceed the 100,000 barrels/day in the short-term.