After a disappointing 2015, the markets are hoping for a rebound in commodity prices this year. Bloomberg TV India caught up with Amrita Sen, Chief Oil Analyst at Energy Aspects, to get a perspective of the commodity sector.

It has been a very weak year for global oil prices. Do you see a recovery this year?

I think the lows should persist for a few more weeks and months because it has been a pretty warm start to the winter. But there is an upside to crude prices towards the second half of the year and definitely into the yearend because we have seen significant contraction in the capital expenditure by oil companies across the world. The global oil majors, American independent companies and even Indian upstream companies have cut huge amounts of capex. That is going to start showing up in terms of higher supplies. It takes a little bit of time but by the second half of this year you should start to see supplies fall quite sharply, which will then support crude prices.

Where do you see oil heading in 2016?

Oil prices should average around $55 a barrel for the course of the year. But again it is a year of two halves — the first half is going to be very difficult for prices to break out of this current range of around $40-$45, may be most of Q1. But by the end of the year, we could see the prices easily back at about $65 or may be $70 if the market starts to tighten up quite a lot.

When are you expecting a recovery in gas prices? The US last year amended a law that will allow it to start exporting gas. Do you expect to see that recovery once LNG shipments from the US start?

In general I would say yes. Once the US export of natural gas starts and because the US’ domestic demand is very strong, US gas prices should recover a little bit. But I think the problem with gas is it is so seasonal and the warm winter is really putting added pressure. But at the end of the day, power demand is still by far the biggest component of gas demand. Exports in the beginning are going to be tiny. It is only in 2018 that they become material. So yes, it provides a little bit of an uplift but not enough to encounter the warm winter. But I think the interesting element of the US gas story is that because of the low prices you might see production respond. I think the combination of low oil and gas prices can mean you get some significant contracts.

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