KUALA LUMPUR, Dec. 4 (Xinhua) -- Petronas, Malaysia's national oil giant, said in its activity outlook report for 2018 to 2020 on Monday that it expects oil prices to hover around 50 U.S. dollars to 60 U.S. dollars per barrel, following the efforts of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC members to cut oil production.
Petronas group procurement vice president Samsudin Miskon said the oil prices have strengthened to above 60 U.S. dollars per barrel, driven by escalating tension in the Middle East, but in the short term, crude oil prices are expected to remain volatile as traders may take position to capture opportunities from gyration of oil prices.
Any geopolitical events can also push up oil prices as the market is still rebalancing, he added.
"However, in the lower for longer environment, we have chosen to remain prudent... until we are confident that the current uptrend is sustainable," he said, adding that majority of analysts agree that 100 U.S. dollars per barrel is "now a thing of the past."
According to the report, the oil prices will be supported by three key drivers, namely the compliance of the OPEC and non-OPEC members on output cut, the response from the United States shale gas producers, sustained healthy level of oil demand growth.
In order for oil prices to continue improving, OPEC and non-OPEC need to demonstrate commitment to the production output cut level pledged in November 2016 of 1.8 million barrels per day. Malaysia has also committed to reduce its oil production by 20,000 barrels per day.
Malaysian government also agreed to extend oil output adjustments until the end of next year, in line with the oil cut extension agreement made during the OPEC and non-Opec members meeting last Thursday.
Meanwhile, the response from the U.S. shale gas producers is also key to price recovery, and so far, they have been agile to capture the opportunities from higher crude oil prices, according to the report.
On the demand side, it said, the sustained healthy global demand growth will help cut oil stock and subsequently, hasten global oil market rebalancing.
Currently, global oil demand is recorded at 98 million barrels per day and is expected to grow by 1.4 million barrels per day in 2018, with 57 percent of the demand growth contributed by the Asia-Pacific region, mainly from China and India.
