Oil prices aren’t expected to rise significantly anytime soon.
That’s according to Andrew Botterill, Partner with Deloitte’s Resource Evaluation and Advisory group who released its latest report Wednesday.
With the recent OPEC cuts, Canada and the U.S. have taken it upon themselves to pick up the slack, resulting in more supply than demand.
Botterill tells Mix News if OPEC stops their cuts and production continues to grow prices could dramatically drop.
“The risk is certainly there and I think that’s at the back of everyone’s mind, we are a much more nimble sector than we were a few years ago and I think there is the ability to manage lower prices easier.”
Earlier in the year, OPEC cut their production so they could reduce the size of their inventory while creating a better supply and demand balance.
Botterill notes the added volume in North America because of the cuts was a risky move for the sector.
“Six months from now or one year from now is OPEC going to continue to take these cuts and that will always provide a little bit of a long-term concern with people if OPEC decides they might bring some of those additional volumes back.”
Meanwhile, he adds oil prices will hover around $48.00 U.S. a barrel for the rest of the year.
“About $4.00 less than we thought four months ago, it is above where it’s trending today so we do feel that the market’s been a little grumpy in the last few weeks but we do feel a little bit of optimism and that is a healthy number our sector can continue to develop.”
Back in January, Deloitte predicted prices would peak around $55.00 U.S. a barrel for the year. In April, their estimates dropped to $52.00 U.S. before this latest drop.