A Swiss asset manager has predicted the oil price will rise in the second half of 2016 and ultimately stabilise at $70 a barrel.
According to Roberto Cominotto, manager of the JB Energy Transition Fund at GAM, the price recovery will be driven by a shortage of supply between now and 2017.
“Very few new development projects will be advancing with oil prices where they are right now,” says Cominotto.
Other analysts predict the opposite scenario, however. Earlier this year, Goldman Sachs warned of a possibility that prices would fall as low as $20 a barrel due to the policy of Saudi Arabia and the other members of Opec not to cut oil production. Opec’s strategy is to put new entrants in the market, such as the US shale oil industry, out of business by holding prices at low levels.
At time of writing, a barrel of Brent crude costs $38 a barrel, compared to a price of more than $100 in 2014.
The low oil price has already created difficulties for the sovereign wealth funds in the Gulf region, which exist to invest oil surpluses. As a result, many MENA-focused asset managers have suffered redemptions.
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