Crude oil prices, according to The U.S. Energy Information Administration in its monthly forecast will average USD 51 per barrel in 2017 and USD 52 per barrel in 2018.
World oil inventories are predicted to have no or little changed in the third and forth quarters of 2017 before returning to normal inventory builds of 200,000 barrel per day in 2018. Given this expectation of relative balance in the world crude oil market through the predicted years, Crude oil prices are expected to be almost flat in the coming months.
Some rising price pressures could be seen in the third and forth quarters of 2018 if world oil inventories decline in these months and if the crude oil market expects world oil inventory withdrawals heading into 2019.
Reasons for downward trend in crude oil price
Some of the main reasons of steep downward trend in crude oil price in last couple of years can be attributed to following reasons:
1. US Dollar gaining strength
The gaining strength of USD is one of the main reasons of drop in crude oi prices in resent years. The value of USD has reverse proportionate to commodities price. When the US Dollar gets strong, commodities prices fall.
2. Organization of the Petroleum Exporting Countries
OPEC is another reason for decline in crude oil prices, because OPEC members still not in an agreement to cut oil supply due to the fear of losing market share.
3. Over supply of crude oil
Over supply of global crude oil is also a reason for decrease in crude oil prices. U.S. crude oil inventories are at the highest level in recent years, causing a sharp decrease in crude oil prices.
4. Decline in demand
Due to the weakening economies of Europe and some other developing countries including China the global demand of crude oil decreases. Now a days vehicles become more fuel efficient which also causes decrease in crude oil demand globally.