OPEC says bear market temporary

The recent decline in oil prices is only “temporary” in nature, with an uptick in demand expected in the third and fourth quarters of 2016, Qatari Minister of Energy and Industry and current president of OPEC Mohammed bin Saleh Al Sada said in an OPEC brief on Monday.

According to Al Sada, the current pressure on oil prices overshadows the “steady improvement” that the market has seen since February, stating that oil was still on the “path to rebalancing.” He also said that the recent decline should be attributed to “weaker refinery margins, inventory overhang – particularly of product stocks, timing of Brexit and its impact on the financial futures markets, including that of crude oil.”

Major economies in the northern hemisphere preparing for the winter season should result in a higher demand for crude from the third quarter onwards. As this preparation is likely to coincide with a decrease in supplies, prices are expected to recover, Al Sada wrote.

Crude futures were up in early trading on Monday on rumours of renewed talks on freezing oil output, with some media outlets reporting on a possible OPEC meeting in Algeria in September. WTI futures were at USD 42.01 per barrels, while Brent futures were going for USD 44.40 per barrel.