Analysts predict oil prices set to increase again after seeing a resurgence Thursday with Brent crude climbing to $78, but will most likely not reach the $100 mark.
Brent crude dropped from $80 per barrel on Wednesday last week to $75 on Monday when Opec revealed its intention to increase supply to the market, plugging the gap left by missing Iranian oil and declining production in Venezuela. Now, however, prices have started to increase again.
Although it has been speculated that oil might go as high as $100 per barrel, Ashley Kelty, oil and gas research analyst at Cantor Fitzgerald said that it was very unlikely that it would surpass $90.
According to Kelty, oil prices will most likely increase again and fluctuate between $80 and $90 but that the Organisation of the Petroleum Exporting Countries (Opec) and Russia would increase supply before the price would be allowed to reach the $100 mark.
Mihir Kapadia, chief executive of Sun Global Investment, believes that we have seen the peak of the oil prices and that they will not increase much beyond what has already been seen this month.
Over the past few weeks, there has been a lot of pressure on Opec to even out the market by increasing supply in lieu of the decreased output from both Iran and Venezuela.
US President Donald Trump also urged Opec to increase production which both Kapadia and Kelty believe had an important impact on driving prices down.
However, the American production has increased significantly and seen a growth of 27 per cent in the last two years to around 10.73m barrels per day. However, according to Kelty the US does not have sufficient capacity infrastructure to keep up the current output.
This could lead to the US reducing output and contribution to the global market which would, in turn, mean that prices may increase again.
Opec will be meeting in Vienna on 22 June to discuss how it intends to deal with the supply issue although it is predicted that it will raise output by around 1m barrels per day.