Today, the Central Bank of the Russian Federation announced a conservative forecast for the oil prices, reporting on the formation of a baseline scenario based on a decline in the oil quotations to $ 40 per barrel by the end of 2017 and maintaining a similar level of the prices in the future. This forecast corresponds to the expectations of the Ministry of Finance at the same annual level of $ 40 per barrel, which was announced the day before. Vestnik Kavkaza talked with the analyst of Sberbank CIB, Valery Nesterov, about the reasons for such pessimistic forecasts of the Central Bank amid the positive conjuncture of the oil market.
- First of all, why does the Central Bank continues to rely on $ 40 per barrel for the current long-term trend, when the oil prices fluctuation is on the level of $ 50 per barrel?
- The forecasts of the Central Bank are laid in the budget, due to this they should be 100% reliable by their nature. Therefore, they are always cautious or pessimistic - this is important for the budget planning, otherwise we will have a problem with the budget payments. All the revenues from the export of the oil above the price of $ 40 per barrel, planned in the budget, will supplement the Welfare Fund and the Reserve Fund, so, it will be welcomed. So, the CBR forecast is an example of a planning based on a cautious, conservative estimation.
- In your estimation, how much will the real oil prices differ from those predicted by the Central Bank in the short term?
- In general, our forecast is $ 50 per barrel for 2017 and in the subsequent years. If we talk about a shorter term, then in the second quarter, we should expect an increase in the price from the current level of $ 50 per barrel. This is due to the seasonal factors: the reduction in inventory, resumption of refineries in the West after repairs, the beginning of the car season, the season of fuel consumption due to the needs of the air conditioners in the southern countries, and so on.
- Is it possible to expect the extension of the OPEC deal on the production cuts due to this?
- If the market responds not enough to the price expectations of the both OPEC countries and Russia, it is quite possible that this agreement will be extended for another six months. Of course, this will also lead to the raise in the oil prices. Let me remind you, that by the end of the year, Saudi Arabia wants to see the level of the prices around $ 60 per barrel.
- What factors will influence the most the fluctuation of the oil prices this year?
- In fact, given the current state of the market, there are a lot of such factors, and they are very contradictory and unpredictable. Undoubtedly, they will continue to be influenced by the prices of speculators' positions in the oil markets and the rates of the economic development of various countries, including the state of the American currency and recovery of the production in such countries as Iran, Libya and Nigeria. The market will depend on the implementation of Trump's energy program, on the growth of the shale production in the US, and on the relationship between the major OPEC members, such as Saudi Arabia, Iraq and Iran. As usual, the prices will grow or fall due to the regional conflicts, diversions on the infrastructure facilities, accidents and natural disasters.
- In your opinion, is it possible to talk about the stabilization of the oil market for now?
- The volatility of the oil prices has decreased, but it is not yet possible to say that it has been overcome. Now there is a big fight to ensure that the prices fluctuate at least not as dramatically as we have seen just recently, as this causes great damage to the economy, primarily of the exporting countries, and it is inconvenient for businesses, importers and refiners as well.
