Analysts: Oil price to fall below USD 60 per barrel by year-end

According to analysts, the price of Brent crude should fall below USD 60 per barrel by the end of the year. The reason is an oversupply in relation to demand, while the OPEC+ cartel is expected to further increase production as some members seek to regain market share and strong summer motoring demand recedes.

The price of Brent crude is currently hovering around USD 65/bbl and has been falling for several days. The decline is being aided by uncertainty surrounding a government shutdown in the US and expectations of higher production from OPEC+.

“I would say that a price below USD 60 in the first quarter of next year is possible; a price around USD 55 is also certainly possible, which would then have a major impact on US shale oil production,” Fereidun Fesharaki, honorary chairman of FGE NexantECA, told Bloomberg Television at the beginning of last month.

OPEC+ could raise its production for November by as much as 500 thousand bpd, as Saudi Arabia seeks to regain its lost market share, two independent sources told Reuters. Sentiment is further supported by investment banks such as Macquarie, which have issued forecasts pointing to a significant oil surplus on the market.

The decline is nevertheless expected to be limited to some extent, given China’s stockpiling of oil and the decision by G7 ministers to step up pressure on countries purchasing Russian oil to stop doing so and reduce their purchases of Russian oil.

Reuters further reports that the US is to provide Ukraine with intelligence support for attacks on Russian energy infrastructure. Market participants say this is causing concern, but until those concerns materialise, the impact on prices remains limited.