Are oil prices to increase?

Oil market changes have been noticeable since the beginning of the week. According to experts, the increase in oil prices is linked with geopolitical tensions and the upcoming December meeting of the Organization of Petroleum Exporting Countries (OPEC). The futures price of a barrel of Brent crude has risen by 0.72% to $46.45 on the London's ICE Futures exchange recently. A clear trend of the growth of oil prices is based on the fact that Saudi Arabia is ready to take measures in order to stabilize the oil market.

As expected, at the end of November before the upcoming OPEC meeting, speculators may begin to close their short positions, so now oil market participants should be ready for a short-term upward movement in energy prices. Vestnik Kavkaza asked experts if oil prices had hit their minimum and whether we should expect a new level of fixation on the amount of ​​$46 per barrel, as well as how the current price tendencies can affect the upcoming OPEC meeting and a possible reduction of prices in oil production quotas.

A senior analyst at Uralsib Capital, Alexey Kokin, said in an interview with a VK correspondent that it is too early to expect a fixation at this level. "Firstly, this trend is very conditional. It is neither stable, nor certain. Secondly, it is clear that some significant events occurred this week, including the Syrian-Turkish border, which also influence the oil market. The growth of tension in a critical region, especially if it is close to oil-producing areas, always affects oil prices. But such outbursts cannot be considered as a long-term trend,'' the analyst said.

"I think that the situation in the market hasn't changed significantly since November 17th, so we can fully expect a weakening of oil prices by the end of the year. An extraordinary meeting of OPEC is to take place next week and markets set their hopes on it. But I have a very pessimistic attitude to the idea: I don't think that there will be any changes of quotas, and the pressure on oil prices will be continued for a long time," the experts said.

The deputy head of the department of state regulation of the economy at the Institute of Public Administration and Management (IGSU) RANHiGS, Ivan Kapitonov, expressed confidence that we have overcome the minimum price.

"The aim is to fix prices for Brent at around $47-48 per barrel by the end of December. The main thing that is happening now is reduction of illegal supplement of oil and petroleum products by ISIS, as well as the reduction of oil production in the US. Strictly speaking, these are the main factors that affect the increase of oil prices," the expert believes.

The analyst expects that a possible reduction of OPEC quotas of oil production will remain at the same level.