Brent Oil Price Forecast To Drop As Low As $80 If Libya, Iran & Iraq Begin Producing

Crude oil is beginning the week in the red down by 28 cents with Brent oil following close behind down 15 cents. WTI light sweet crude oil is trading at 92.67 as Brent oil touches 106.46 both are trading at the bottom of their trading ranges. Oil prices fell in Asian trade on concerns that disappointing US jobs data could affect demand in the world’s biggest economy. 

Financial markets were shocked by the US Labor Department’s jobs report for December, which showed the economy added a mere 74,000 jobs, well below the consensus estimate of 197,000. The US unemployment rate dropped to 6.7 per cent, from 7.0 per cent in November, but that seemingly positive decline mainly reflected the fact that more people had given up looking for work, analysts said. The health of the US economy is a key driver for crude prices because the United States is the world’s biggest oil consuming nation.  But while the jobs data was weaker than expected, it could also prompt the Federal Reserve to delay any further reduction in its stimulus program meeting on January 29^th.  

The biggest surprise has been the steady decline in Brent oil prices, which is possibly the effect of the easing of sanctions with Iran and the drop in geopolitical tension. Over the weekend an interview was printed by the Kuwait News Agency with Mohammad Al-Shatti, CEO of Kuwait Petroleum Corp. Oil prices will take a downward trend in 2014 driven by a remarkable increase in supplies not matched with the demand surge, a Kuwaiti oil expert projected.  In an interview with KUNA Saturday, Mohammad Al-Shatti even expected that the prices could go down to USD 90 and USD 80 per barrel in 2014, if Iraq, Iran and Libya’s oil production swelled. “The price of Brent fell from the average USD 111.6 in 2012 to USD 108.6, down by about USD three,” l-Shatti said, adding that projects differ over the oil market outlook in 2014.

 He went on say that “although there is a consensus among experts that the prices would take a declining trend, there are differences about the amount of decline.” Al-Shatti stated that many market observers expect that average price of crude oil will reach USD 105 pb, but others believe it will be much blow than that figure.

“The oil prices may fall below USD 100 benchmark to reach USD 90 pb amid projections of remarkable growth in oil supplies in 2014 compared with modest increase in demand,” he explained. He pointed out that the continued recovery of the global economy and improving performance of emerging economies would have a positive impact on the world demand on oil. “Unlike 2013, 2014 will see a recovery of the global economy at a steady pace supported by remarkable improvement in the performance of the US, European and Asian economies with expected growth rate of 3.3 percent,” Al-Shatti told KUNA.

The decline in Brent oil prices which is the controlling factor gasoline prices has also helped gasoline to drop as US drivers enjoy lower prices at the pump. The average price for a gallon of gasoline in the United States rose to its highest level since mid-October, according to the Lundberg survey released on Sunday. A gallon of regular-grade gasoline cost $3.3459 on average across the United States, up from $3.2618 three weeks earlier, according to the survey taken on Jan. 10. The average was slightly higher than $3.3247 average from the year-ago period. In the Oct. 18 survey, the average was $3.3628. At the time in question crude oil was trading close to the $100 price level.