World crude oil prices have fallen by 3% in the past week, defying attempts by the producer group Opec to boost prices as demand splutters.
And that spells good news for Irish consumers and the debt-ridden Irish households which are likely to have lower prices for longer, according to experts.
“The recovery in oil prices, which saw prices gain over 10% in July to $53 a barrel, has stalled in recent days. The price is lower by 3% this week on reports that the US Energy Information Administration, a key source of energy data and forecasts, cut its oil demand forecast by 400,000 barrels per day on lower demand from emerging markets,” said Joe Egan, an energy trader at Bord Gáis Energy.
“The problem for Opec, however, is that it now faces a leaner and meaner swing producer in the form of US shale oil, able to adapt much more quickly to oil price moves. In recent months, US shale oil producers have demonstrated an ability to produce profitably at prices above $50 a barrel, possibly putting a cap on oil price gains for now,” Mr Egan said.
AA director Conor Faughnan said Irish motorists could be “reasonably confident” that in the next quarter, fuel prices would stay on the low side.
“The omens are good, with the caveat that nobody can ever truly know what will happen for sure. However, the signs point to stability. In relative terms, oil prices are quite low albeit fluctuating over the past 12 months,” Mr Faughnan said.
“What type of winter we have will tell a lot. If there is a benign winter in the northern hemisphere, we will probably see prices stay low.
“Another factor is that the value of the dollar has fallen somewhat, and that has tended to pull prices down. You can never truly predict but current signs are good,” Mr Faughnan said.
Mr Egan said there has been continued evidence that Opec nations were sticking less to the group’s production cuts, as Libya and Nigeria increase oil production.
“Libya, for example, has seen its production grow by an additional 180,000 barrels a day in July, and has increased production by half a million barrels in the last three months”, exacerbating Opec’s attempts to address the global glut.
And pledges by Saudi Arabia and Iraq have failed to prop up prices.
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