(MENAFN- The Peninsula)
By Satish Kanady
DOHA: Sounding a positive note about the crude-oil market, Minister of Energy and Industry H E Dr. Mohammed bin Saleh Al Sada (pictured) , who is also the president of Opec, said yesterday the oil demand was expected to be strong in the second half of 2016, while the global supply of petroleum would weaken.
'Expectation of higher crude oil demand in third and fourth quarters of 2016, coupled with decrease in availability, is leading the analysts to conclude that the current bear market is only temporary and oil price would increase during later part of 2016,” Dr. Al Sada said in a statement issued from Vienna.
The oil price had experienced a steady improvement since February this year, following a decline in crude oil production, supply outages and a decrease in oil inventories, while the global demand for oil improved in that period.
Dr. Al Sada said that the recent decline observed in oil prices and the current market volatility is only temporary. These are more of an outcome resulting from weaker refinery margins, inventory overhang — particularly of product stocks, timing of Brexit and its impact on the financial futures markets, including that of crude oil.
The Minister said, the economies of major oil consuming countries are expected to improve which in turn would augment oil demand in the coming quarters, especially in preparation for the approaching winter season in the Northern Hemisphere.
He reminded that investment is needed not only to meet the growth in demand but also to stem the natural decline of oil production from operating wells. He alluded to the expected decline in the oil supply vis-à-vis the demand and tightening of the markets in the period ahead, due to the unprecedented drop in capital expenditure in the oil and gas projects across the globe during 2015 and 2016 leading to curtailment of investments which were scheduled to be undertaken over the next four years.
Opec continues to monitor developments closely, and is in constant deliberations with all member states on ways and means to help restore stability and order to the oil market. Dr. Al Sada said an informal meeting of Opec member countries is scheduled to take place on the sidelines of the 15th International Energy Forum which will take place in Algeria from September 26 to 28.
Meanwhile, crude-oil futures rallied yesterday, after reports that several members of the Opec are pushing for a deal to freeze production to boost prices. Light, sweet crude for September delivery rose 59 cents, or 1.4 percent, to $42.39 a barrel, while October Brent on London";s ICE Futures exchange gained 55 cents, or 1.2 percent, to $44.82 a barrel.
The Wall Street Journal reported last week that several Opec members want to revive the idea of setting new limits on oil production this fall. Futures have wavered for the last several sessions around the low $40-a-barrel mark after last week";s rebound from bear-market lows. The recent slump in prices have revived concerns over a supply glut in the market, fueling worries among some Opec countries that the price is becoming too low again.The Peninsula