In monthly recent report, the bank said that OPEC members had continued to produce over the 30 million barrels per day (bpd) quota for the 18th month in a row.
Saudi Arabia's oil production peaked at 10.6m bpd in June 2015, while Iraq has increased output over the year by around 700,000 barrels, reaching 4.2m bpd in November last year, the NCB said. The lifting of sanctions on Iran "is expected to bring an additional 600 thousand barrels a day" meaning OPEC countries together are likely to continue producing more than32m bpd, it said.
On the demand side, the NCB said it expects the market in China to grow at its slowest rate since 1990, at less than 7%, and for there to be growth of 4% in other emerging markets. This would be "the slowest pace [of growth] since 2010 and well below their ten-year average of 7%", the NCB said. ,. It said this will impact on the level of demand and said the forecast is for demand to rise by between 1.2 and 1.4m bpd, down from last year's high of 1.8m bpd, which was "a five-year high".
The NCB said: "Oil markets are expected to remain in a lower range around [$40-80 per barrel] during 2016-2020, with a bias to the downside, especially that oil lacks strong upside momentum with markets oversupplied. Lower compliance among OPEC members and higher supplies from Iran and Iraq are expected to surpass demand growth emanating from China that will not be able to generate the 40-50% of total incremental oil demand of previous years."
The Saudi Gazette said that global stocks of crude oil will also affect markets. The US inventory is 27% higher than in 2014, at 487.4 billion barrels, while the OECD inventories are at 2.971 billion, equivalent to 60 days consumption, its report said.
Oil and gas expert George Booth of Pinsent Masons, the law firm behind Out-Law.com said that the NCB's price predictions are perhaps "on the optimistic side".
"Standard Chartered are talking about $10 a barrel, for example. What is clear is that we are in an extended low oil price environment and the industry globally needs to continue to respond accordingly. This means continued pain, unfortunately, for some in the upstream industry plus a need to achieve still greater efficiencies in the supply chain and embracing standardisation and innovation," Booth said.
"More collaborative relationships across the industry are required, together with a willingness from host governments to show the flexibility that is needed to allow infrastructure to remain in place. That would help to support local and international investors until the market improves, as it undoubtedly will," he said.