Fair price for oil is $130 & will be, despite Saudi attempts - World Bank consultant

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Feb 8, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    In an interview earlier today, International Oil economist and a World Bank consultant, Dr. Mamdouh G. Salameh noted that the oil prices would eventually return to its fair prices that is around $ 130.

    Key Quotes:

    “A reasonable oil price for the global economy, to encourage investment and expansion of production is $100-130, because the global economy can absorb that price easily, because we don't have to look only at the price as such - we have to look at the fact that the oil companies, the global oil sector, needs the price of $125-135 a barrel to balance their books.”

    “It will, eventually, because, if you look now, even if the price is around $33, to the fundamentals of the global oil markets, the fundamentals are positive, meaning that, according to the World Bank and to the IMF, it is projected that the global economy will grow this year at 3.5% and furthermore, the IEA in Paris has indicated that this year, the global demand for oil is growing at 1.4% or 1.5 million barrels a day.”

    “Even China, whom they say, their economy is slowing - well, their economy grew 7% in 2015 and is projected to match this, or a bit less, this year. So, they are a far bigger economy that they were in 2007, few years ago. So, all the fundamentals are positive, so that should be reflected in the higher oil price, even if OPEC does not cut production.”
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