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Oil price to rise by the end of the year, says Capital Economics

Tom Pugh, commodities analyst at Capital Economics, tells Proactive that companies in the oil sector will have to look at reducing production to stay afloat, having already “cut pretty much all of the fat from their operations.”

He says oil production has been “surprisingly and quite stubbornly resilient” in the wake of the 70% slump in oil prices since mid-2014, but thinks this is about to change.

He expects prices to remain quite weak for the first half of the year, due to a potential rise in supply coming from Iran and a general unwillingness from other countries to reduce their production.

But he sees supply cuts coming through in the second half of the year, along with some evidence of stronger demand, which Pugh says “should help to rebalance the market.”

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