Crude oil prices expected to remain low

Crude oil prices are expected to remain low for years to come.

In a research note, MIDF Research said shale oil producers in the United States (US) are not expected to limit their production despite weakness in global crude oil prices which led to the dumping of supply in the market.

MIDF Research said this was because shale oil producers incurred lower production costs following the use of advanced technology.

Through an efficient cost management policy, shale producers are able to maintain a sustainable level of profitability.

The firm further said that the demands showed no recovery in addition to the continued excess in supply, which led the commodity prices to remain lower.

Several long-term factors are expected to continue to exert pressure on oil prices which include slow population growth and the use of advanced technology in exploration.

The firm added that the current interest is in the oil prices trend after the US Federal Reserve set to increase its interest rates expected this December.

Previously, the Organization of Petroleum Exporting Countries (OPEC) led by Saudi Arabia, was vocal about not limiting production amid weakening global demand.

Such actions further aggravate the price of the ‘black gold’ which lost more than 50 percent in value since 2014.

The situation is expected to worsen when Iran pledged to start exporting oil again shortly after the economic sanctions by western countries have been lifted post nuclear agreement with the United States.