The Brent oil price is trading higher again after two and a half to record highs, breaking through the psychologically important resistance levels on which they usually plateau during their moves. As China, India, Europe, the US, and Japan continue to pressure for higher production rates from the major oil exporters, the pressure will only increase. Even if all these nations produce more, however, there is no guarantee that the cost of oil will stay constant due to political unrest or the unexpected behavior of these oil producing nations. There are many factors that can cause the cost of oil to fluctuate.
There is a bearish outlook this week on global oil demand due to weak economic growth in China, declining oil demand in India, and slow growth in the US. However, some bullish traders see a price forecast of greater volatility in the coming quarters as China becomes the economic engine of the world. The slowing of China's economy is expected to have a profound impact on the global oil market. This will reduce demand and result in increased supply as the world's largest producer of oil looks to fill the gap. China's demand and supply imbalance are being felt in the commodities markets this week.
This bearish outlook does not mean that global oil prices will drop below the current level during the third quarter. Instead, it is a sign that investors are taking the price of oil into their consideration when making their investment decisions. The recent increases in the price of oil, along with the slowing in Chinese growth, will still leave the market with sufficient demand to balance the supply. A prezzo petrolio brent forecast shows that the cost of oil will remain at an all time high through the end of 2021.
An increase in the price of oil would most likely send demand and supply down, creating volatility in the market. The recent spike in oil prices caused by the Arab Spring uprisings was an example of how the price of oil can be affected by external events. In the third quarter, oil prices will be on the rise because of the deteriorating economy in the United States. Economic reports released over the last few days showed that the U.S. economy has experienced its worst decline in years, adding to the instability of world financial markets.
According to estimates, the fall in the oil production in the second half of the first year compared to the peak reached in the second half of the last decade is one of the reasons for the latest drop in prices. Although the decline in global oil production is a natural reaction to the increase in demand in the first half of the decade, the lowered production is also having an effect. There is a decrease in the efficiency of the drilling techniques used in the exploration and development of new oil fields. The lack of drilling efficiency has resulted to lower output levels and higher costs of production. These factors have caused a 50% decrease in the growth of global oil supplies.
In addition, the increased supply will result to increased competition among producers of crude oil. The Brent crude oil price is at its highest since October, 2021, according to estimates. The price of crude oil has climbed by almost $10 a barrel in the last few weeks, which is slightly above the current average. Analysts believe that the price of crude oil may continue to rise because of the unstable financial situation around the world.
However, analysts do not expect the price of oil to exceed the current levels in the second half of this year. They believe that the prices of crude oil will remain stable in the second half of this year. Based on their projections, the price of oil will average around the level of about US$100 a barrel, which is the current market price. However, they believe that the price of crude oil will go up by about two percent or more during the third or fourth quarters of this year, which is much higher than what most investors expect.
Due to the increased pressures on Iran, the International Energy Agency has started to reduce the number of crude oil stocks being exported from Iran. This means that Iran is losing the opportunity to earn revenues by selling more than the amount it produces. According to the reports, the reduction of exports is only planned for the coming months. There is no clear indication as yet if the IEA will increase the production of crude from Iran. Nevertheless, this development could significantly affect the global markets. The reduced exports would then lead to a fall in the oil prices and the traders will suffer from the resulting increase in market price.