Vivek Dhar, CBA Mining & Energy Commodities Associate Director, discusses OPEC prices and production of oil with Ramy Inocencio and Haidi Lun on “Bloomberg Daybreak: Australia.”
Brent at $65 is up 5% from its 2018 low, but is it heading south moving forward?
“What we have seen this year is a physical build up of oil stocks, i.e. supply outpacing demand, as US sees 14% growth in output in 2018,” said Dhar.
“Demand, despite positive economic outlook globally, will not keep up with supply, so there is a downside risk to prices.”
Dhar said that OPEC’s aims at reaching 5-year OECD averages in stockpiles will fall short of expectations.
“OPEC wasn’t price targeting when it cut production (by 1.8 million bpd), but rather looking to get rid of stock,” he said.
“At $65-70 Brent, US shale, with an average of 6 months between rig deployment to production, can come on board really quickly, and reach those 11 million bpd targets.”