Although the Brent crude prices saw profit taking post the initial rally , the Nymex crude prices were holding firm around USD 44.92 per barrel.
Azlin Ahmad,Editor- Crude Oil, Argus Media said the two oil producers will meet only in October, after the informal meeting of OPEC ministers later in September. So this rules out any deal of an output freeze between OPEC and non-OPEC producers.
The house, she said expects global crude supply to still exceed demand in the third quarter and by fourth quarter one would see a balance in crude oil supply and demand. They expect crude oversupply only to fall significantly by year-end.
So, although the prices could trend up a bit in next few months, Brent crude prices would not rise above USD 50 per barrel and stay at those levels for the rest of the year. They would stay in high 40’s for next few months.
Below is the verbatim transcript of Azlin Ahmad’s interview to Manisha Gupta on CNBC-TV18.
Q: What have you read on the Russia and Saudi Arabia forming a new oil group and do you read it as market moving really?
A: I think when the news first came out, where the market saw that it would be something that would happen immediately, but what we understand is that the first meeting of these two major producers will not be until October and this is after the informal meeting of Organization of the Petroleum Exporting Countries (OPEC) ministers in Algiers later in September.
This means that there will be less likelihood of any deal of any output freeze between OPEC and non-OPEC producers when they meet in Algiers, so it seems to be more of slightly bearish news I think. I think that it just indicates that Saudi Arabia and Russia will continue to cooperate, but that it is unlikely that they will decide to do any immediate action.
Q: In light of that how would you look at the prices then, would you say we have done a bottom and from here on and next quarter it only is going to be north?
A: We do think that in the short term over the next maybe one or two months that the prices will still be about – – I am looking at the price now and it is about USD 47 for ICE Brent, but we do think that that will be still around the levels that will hover in the next 1 or 2 months. We think that the market will be a little bit stronger in the next few months, but it will not be shooting up and we don’t think that prices or ICE Brent are going to go up above USD 50 and stay above USD 50 for the rest of the year. It is still a little bit too early to think. It is still about high USD 40s in the next few months.