Algeria's energy minister predicts that oil prices will rise to $40 per barrel following the implementation of the OPEC+ output cut deal on May 1, he said during an interview on the country’s national radio channel on Sunday.
Mohamed Arkab, in recognition of a gradual economic recovery triggered by the lifting of the coronavirus lockdown, said, “the global economy is not going to stay paralyzed.”
Arkab emphasized the recovery in China and said the normalization of the country’s transportation sector “is driving up global demand.”
The rapid spread of COVD-19 has lowered economic activity in many countries, caused weak oil demand, led to the incremental rise in the supply glut while heightening the risk of oil storage capacity hitting its limit.
Citing a report by the International Energy Agency (IEA) which forecasts oil prices to be $35-37 starting in May, Arkab predicted that 'the price will be $40 starting from the third quarter” following the planned OPEC+ production cut.
The Algerian energy minister also said his country has not sold its oil at a loss as the price has never dropped below $20.
WTI crude oil fell Monday into negative territory for the first time in history. The price of WTI under the futures contract, which expired on Tuesday, fell to as low as -$37.63 by plummeting more than -290%, indicating that the massive oversupply against low demand is forcing suppliers to pay buyers to unload their inventory.
Brent crude oil dived below the threshold of $20 per barrel last Tuesday. It fell to as low as $18.02 per barrel, marking its lowest level since February 2002, at 0935 GMT for a 29.27% daily loss after it closed last Monday at $25.48 a barrel.
OPEC+ oil-producing nations agreed on April 12 to cut their total oil production starting from next month -- a decision that came a month late having previously met in Vienna, Austria on March 6.
The one-month delay to curb output, on top of implementing cuts from May 1 onwards, has left the global oil market with an excess of supply to add to the glut, which in turn has dramatically pushed down crude prices.
By Sibel Morrow