This article first appeared in The Edge Malaysia Weekly, on March 14 - 18, 2016.

The sixty-four thousand dollar question is, where are crude oil prices headed? Some indication was given late last month, when 81-year-old Ali Ibrahim Al-Naimi, the influential minister of petroleum and mineral resources of Saudi Arabia, delivered a keynote address at the annual IHS Cambridge Energy Research Associates Week conference in Houston, the US.

When asked during the question-and-answer session as to when the oil oversupply situation would end, Al-Naimi jokingly said that if he knew, he would head for Las Vegas.

Then, on a more sombre note, he added, “I can say this — it’s going to end. But, when? I don’t know, but it will end.”

The oversupply situation has wreaked havoc and caused crude oil prices to plunge to a low of US$27 per barrel in January — the lowest since 2003 — in contrast to 2008, when the West Texas Intermediate hit a record high of above US$145 per barrel and maintained respectable levels of above US$100 in 2013.

In a nutshell, Al-Naimi has quashed the notion of Organization of the Petroleum Exporting Countries (Opec) cutting production to artificially raise the price of oil, which would only benefit high-cost producers.

Speaking to The Edge on Al-Naimi’s keynote address, Tan Sri Mokhzani Mahathir, an investor in oil and gas companies, says, “The market demands that the price of energy has to be low. So, cutting supply artificially so that the price of oil will go up and high-cost producers can still be in business is not sustainable.”

Mokhzani has a 10.26% stake in oil and gas giant SapuraKencana Petroleum Bhd and 18.55% equity interest in Yinson Holdings Bhd.

He says, “US$27 is still higher than the 2001 price of US$18 and the 1984/85 price of US$8.

“Right now, it’s unstable. You have US$28 oil and you have US$40 oil, all in a span of three weeks … so, what’s real and what’s not? Ten economists will say it’s going to crash to US$20 and another 10 will say it’s going to be US$80 by the end of the year … take your pick.”

Datuk Kamarul Redzuan Muhamed, managing director of Uzma Bhd, says crude oil prices have “already double bottomed, a sign that the worst is over”.

“We are seeing very strange signs ... when there is good news, the market goes down, and when there is bad news, the market goes up. When you look at history, these are signs the market is ready for a recovery … but there are so many permutations out there. But since we have been down for so long, the recovery will be very fast,” he says.

Bucking the trend and coming out with a clear-cut number is Ramesh Veetikat Ramachandran, chief financial officer of Scomi Energy Services Bhd.

“In our (Scomi’s) view, crude oil prices will trade between US$30 and US$40 per barrel for the next 18 months,” he says.

He adds that Scomi is focusing more on production cycle work than exploration and will look at key areas such as well rejuvenation, enhanced oil recovery, well stimulation and production chemicals. “These services will continue to be in demand as the existing wells will need to produce the required 90 million barrels per day.”

Last week, Moody’s estimated oil prices to be at US$33 per barrel in 2016, before rising to US$38 in 2017 and US$43 in 2018.

It still looks like it’s anyone’s guess where oil prices are headed.

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