(MENAFN- ProactiveInvestors - UK) There were few signs of recovery in the oil price this week as sentiment remained dampened and fresh supplies of oil from Libya and Nigeria were anticipated on the market.
In early trading on Friday, Brent crude was priced close to US$46 with WTI above US$43 a barrel.
The sluggish state of the global economy continues to confound the market and worry the key players in the energy sector.
Everyone was banking on nearer term growth in global oil demand and while demand keeps growing, it has slowed down to a less than inspiring rate.
The International Energy Agency and OPEC released their monthly oil market reports this week with OPEC expecting moderate economic growth to continue.
The organization anticipates that oil demand will rise by 1.23 million barrels a day for 2016.
The IEA said oil demand in Asia was 'wobbling' and said it expected demand to grow at around 1.3 million barrels, down about 100,000 barrels a day from its previous estimate.
Central bankers expected to be influential
The OPEC report was also concerned about the impact of further monetary stimulus on economies as interest rates were already low in most countries.
'Any decision from main central banks on monetary policies, particularly the US Fed, will continue to be influential.' The report adds that high debt levels in most key economies will limit further stimulus.
Some critical US economic data was also released this week and Jason Schenker, President of Prestige Economics says the negative industrial production figures, coupled with the lack of inflation and poor retail sales all point downwards and 'support our expectations that the Fed will not raise rates this year, and that US growth is slowing.'
He still maintains that the US should 'expect a recession to begin by the end of the year.'
Many players keep speculating as to what the US Federal Reserve will do, but as Schenker says, 'stick a fork in the Fed: they're done! We expect no rate hikes this year.'
A report from Capital Economics sees a glimmer of hope coming back to the sector.
'Commodities in general have benefited from hopes of an extended period of very low global interest rates, which leaves them vulnerable to a resumption of Fed tightening and any renewed strength in the US dollar.'
The report adds, 'the medium-term prospects are brighter, particularly for oil prices which we expect to recover to US$60 per barrel in 2017.'
Goldman Sachs says risk is to the downside
Leading investment bank, Goldman Sachs Group said the price 'risk is to the downside,' as the head of commodities research Jeff Currie said he anticipated the oil price at around US$45- US$50 for the next 12 months, saying there were no clear catalysts on the market to help boost the price in the short-term.
The over supply in the market continues and despite ongoing geopolitical issues in Libya, the country has managed to re-open some of its ports.
The chairman of the National Oil Company, Mustafa Sanalla said the company will be resuming exports soon.
Libya's current oil production is around 300,000 a day, but the NOC is hoping to double production in the coming months.
Some Nigerian oil has been off the market for several months as militants in the Niger Delta waged local war on pipelines, shutting in some production.
A government brokered ceasefire is making it possible for ExxonMobil and Shell to resume exports.
Its estimated that more than 750,000 barrels a day have been off the market so far this year.
Lack of industry investment
The lack of investment in the industry will be among topics dominating major energy conferences in the final quarter of the year.
The OPEC report stated, 'there is a considerable negative impact on global growth from the energy sector due to the sharp decline in investments, mainly in the oil and gas sector as well as lower output values."
The IEA also released an industry investment report this week where it foresees the return of the shale oil industry once the prices recover.
Despite many players going out of business due to the downturn, the report says 'while financial pressures in the shale industry remain widespread, despite a recent partial recovery in oil prices, the operators that have filed for bankruptcy represent only a minor proportion of total US non-conventional production.'
There's been less talk this week about the possibility of an oil production freeze agreement from OPEC and non-OPEC players.
The ministers will be preparing for the International Energy Forum gathering in Algeria and while diplomatic negotiations may be taking place behind the scenes in advance, key analysts don't hold much hope on any practical agreement that will favourably move the market.
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