INVESTMENT bank UBS has predicted the oil price will increase in the last quarter amid continued market volatility following attacks on Saudi Arabian oil facilities last month.
However, the bank emphasised that it expects the crude price to fall significantly next year given booming production in the shale fields of the USA and concerns about the outlook for the global economy.
Read more: Oil price warning bodes ill for North Sea
In a report by the bank’s wealth management arm, UBS said it expected the Brent crude price to rise to around $63 per barrel at the end of 2019, from around $58.80 yesterday.
UBS noted that global oil inventories had fallen as a result of lower Saudi production last month, following drone attacks on facilities in the kingdom. It said there was little spare production capacity available globally to make up for any shortfall.
Experts at UBS appear to believe the crude market is likely to remain volatile following a year in which the oil price has swung between a high of $85 per barrel and a low of less than $55/bbl.
Read more: Shale boom in US will have implications for Scottish firms
“Historically, oil prices tend to be very volatile during periods of thin spare capacity,” said the bank.
But it predicted growth in output in countries that do not belong to the OPEC exporters organisation, such as the USA, and weaker oil demand growth should move the market into oversupplied territory next year. “We forecast a drop toward USD 55/bbl by mid-2020,” it said.
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