Russian financial services chief expects oil to settle above $30 per barrel as market swings subside during the latter half of the year. Photo by Calin Tatu/Shutterstock
DAVOS, Switzerland, Jan. 22 (UPI) -- Oil market volatility can't last very long, as $30 per barrel may emerge as the low-point for the year, the head of a Russian financial services company said.
Crude oil prices are pulling away from weekly lows of around $27 per barrel, surging back above the $30 mark in early Friday trading. A midterm market report from the U.S. Energy Information Administration forecasts Brent crude oil to average $40 per barrel for the year, with West Texas Intermediate, the U.S. benchmark for crude oil, selling at a $2 discount to Brent.
Herman Gref, the chief executive officer at Russia's Sberbank, said from the sidelines of the World Economic Forum in Davos, Switzerland, that midterm swings of around 5 percent are unsustainable.
"The market will remain volatile but not the same as now," he said. "So far no one predicts a big rebound, but [crude oil should be] around $30 - 40 per barrel at the end of the year."
BP CEO Bob Dudley said earlier this week from Davos he expected volatility would evaporate by the latter half of the year, with oil recovering to as high as $40 by the end of 2015 and returning to $50 per barrel by next year.
Russia's export-based oil economy is facing pressure from the energy sector downturn. The national currency, the ruble, is devalued against other currencies and the economy as a whole is plagued by low growth and high inflation.
A December review from the Central Bank of Russia said oil prices should return to $50 per barrel by the first half of 2016, but stay there until at least late 2018. Lower oil prices are expected to limit Russia's economic recovery, but the economy may become less exposed to commodity prices as it shifts to more productive industries.
The bank said further contraction in the Russian economy is expected, though the pace of decline is slowing.