Abu Dhabi’s biggest bank says US oil prices may drop to US$20 a barrel
Oil prices may drop to near US$20 a barrel this year as the global glut of crude persists into 2017, Abu Dhabi’s largest lender says.
US benchmark West Texas Intermediate (WTI) crude should trade in a range between US$25 a barrel and US$45 a barrel for the rest of the year, “although a very brief spike down towards US$20 is possible”, the National Bank of Abu Dhabi wrote in its Global Investment Outlook 2016 report on Sunday. Prices at the lower end of the range would stimulate demand growth, it said.
“For at least the next few years there do appear to be solid fundamental reasons why oil prices are likely to remain in a trading range,” analysts at the bank wrote in the report. Producers had sold less of their crude this year through forward transactions than in past years, and forward-selling would likely accelerate if prices rallied much above US$40 a barrel, the bank said.
Abu Dhabi is the capital of the United Arab Emirates, which holds about 6 per cent of the world’s oil reserves. Almost all regional oil exporters were set to register “twin deficits” on both their current and fiscal accounts for last year and this year, National Bank of Abu Dhabi said. WTI prices have dropped about 40 per cent in the past year.