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Oil prices are at record lows, having fallen to levels of before the Great Financial Crisis. Four major OPEC members recently announced a freeze in production. Will the oil price find a bottom this year?
‘The only cure for the low oil price is a low oil price’The oil futures curve is still in contango, which means that futures prices are higher than spot prices. A higher futures price reflects expectations of a gradual rebalancing of the oil market later this year or next year. In recent weeks, the curve has shifted upward which points to tightening of the market as well. This may well be the start of a bottoming out process in the oil price. We expect Brent oil prices to move in a range between USD 35 and USD 65 per barrel this year. In the longer term, they are likely to creep up to justify investments in non-shale oil activity, such as deepwater developments.
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