Expected oil prices in 2019: Here's what experts has to say
New Delhi : With the high rise of prices, oil has been a major point of discussion in the year 2018. This year too, the oversupply and demand are two major points on the concern list. Recently, President Donald Trump’s tweets regarding lower oil prices and U.S. shale producers pumping out unprecedented volumes of crude, threaten to undo all of OPEC and Russia’s years-long work.
As we move forward to 2019, there are major forecasting trends in 2019 which is even more hazardous than usual,” said Neil Atkinson, head of oil markets at the International Energy Agency. So, what is the expected state of oil in 2019? Just take a look at what experts has to say
Ryan Lance, CEO of ConoccoPhillips says:
“We expect oil markets to remain volatile, in part driven by flexible North American shale production that can ramp up and down quickly in response to changes in investment levels.
In order to thrive in this environment, given the short-cycle nature of shale, we believe it’s necessary to run an exploration and production business for sustained through-cycle financial returns, which is necessary for attracting investors back to the sector. Ours must offer investors both resilience to lower prices and participation in higher prices, and we’re doing that via an approach that rations capital across a low-cost-of-supply portfolio, competes on per-share versus absolute growth, and pays out a significant portion of cash from the business to shareholders.
From the resource and production standpoints, North American shale continues to be a bright spot in the global energy industry. Shale has transformed the industry and will enable the U.S. to stay positioned as the world’s No. 1 producer of both liquids and natural gas. We believe shale can drive the industry’s growth for many years.
Among the most serious near-term risks we see to the energy industry are geopolitical uncertainty and factors that could reduce global economic growth and energy demand.”
Greg Sharenow, portfolio manager, Pimco says:
“There will be a stark change from the past four years for commodity investors, as one big driver of balance and prices will be notably diminished. Specifically, OPEC has moved from competing for market share in 2014 and contributing to materially lower prices to then reversing course two years later, dropping output sharply and contributing to rising prices. But 2019, in many respects, might be notable for the lack of shock-and-awe OPEC policy as it shifts to an approach of limiting any surplus or deficit. This has some meaningful implications for markets and expected realized volatility.
OPEC’s decision should lead to a gradual stabilization of Brent prices and, dare one say, a return to a lower-volatility environment. That said, there are known unknowns that could upend the best-laid plans, such as
Whether the U.S. is able to continue to exceed production expectations; Whether the slowdown in the global economy devolves into something worse, or if policy makers can help change the trajectory; And how effective additional U.S. pressure on buyers of Iran crude will be, with the current set of waivers set to expire late in the second quarter of 2019 (conveniently just after the next OPEC meeting).
In addition, at the end of 2019, the International Maritime Organization is set to restrict sulfur content in marine fuels, offering additional potential support to lighter, lower-sulfur crude oils such as Brent. Currently, we see these risks as roughly balanced around our baseline and quite manageable for OPEC.”
Neil Atkinson, IEA’s head of oil markets says:
“Forecasting trends in the oil market for the new year looks to be even more hazardous than usual. There is a long list of uncertainties on the demand and supply side of the balance.
As the new year progresses, the implementation in 2020 of new marine fuel regulations by the International Maritime Organization will draw closer. We will learn whether the shipping and refining industries are prepared for this major regulatory change without serious disruption to the fuel market.
For supply, there are many complicating factors: the recent agreement by OPEC countries and 10 non-OPEC producers to cut oil production will, if it is successful, help to re-balance an oil market that was becoming over-supplied. We will see what the U.S. decides with respect to the second round of waivers for Iran’s oil customers. Will we see a significant further decline in production from Venezuela? Will Libya manage to maintain production or will it fall victim to more regular interruptions?
These are major uncertainties. What the IEA hopes is that the market is able to operate in 2019 without the very high volatility we saw in 2018. It was not good for consumers to see oil prices above $85 a barrel as we did in early October. But nor is it good for producers for prices to fall to $55 a barrel as this will inhibit investment in much-needed new production capacity.”