8 Mar 2016
Crude oil prices forecast to recover - Lloyds
Analysts from Lloyds Bank, expect crude oil prices to recover in the future and also continue to see the barrel at $55 (Brent) and $54 (WTI) by year-end.
Key Quotes:
“While front-month Brent and WTI are 40% higher than their January lows, most measures of market sentiment suggest only cautious optimism. That is unsurprising given the chance that OPEC members and other large non-OPEC producers would be willing to formally agree to freeze production at January levels still remains below 50%.”
“We have only modestly adjusted our near-term crude oil price forecasts. Brent is now forecast to average $35/bbl in Q1 and $37/bbl in Q2 respectively, compared with $37/bbl and $35/bbl previously.”
“While fears of a slump in Chinese demand, a key theme for crude oil over the last six months, may be overdone, uncertainty around US shale is likely to persevere over H1. This suggests downside risks to our unchanged Q4 2016 Brent and WTI forecasts of $55/bbl and $54/bbl, respectively.”
“While the short-term risks to our forecast are large, we have greater confidence that prices will move higher in the longer term.”
“Following a 30% reduction in capex levels by global exploration and production companies in 2015, we expect at least another 20% reduction this year and possibly more if prices stay lower for longer. Over the medium term this should help guarantee that the current supply overhang is alleviated.”
“A better longer-term supply/demand balance should start to filter through to global crude prices towards the close of 2017. Hence, we forecast Brent crude oil to average $70/bbl in Q4 2017.”
Key Quotes:
“While front-month Brent and WTI are 40% higher than their January lows, most measures of market sentiment suggest only cautious optimism. That is unsurprising given the chance that OPEC members and other large non-OPEC producers would be willing to formally agree to freeze production at January levels still remains below 50%.”
“We have only modestly adjusted our near-term crude oil price forecasts. Brent is now forecast to average $35/bbl in Q1 and $37/bbl in Q2 respectively, compared with $37/bbl and $35/bbl previously.”
“While fears of a slump in Chinese demand, a key theme for crude oil over the last six months, may be overdone, uncertainty around US shale is likely to persevere over H1. This suggests downside risks to our unchanged Q4 2016 Brent and WTI forecasts of $55/bbl and $54/bbl, respectively.”
“While the short-term risks to our forecast are large, we have greater confidence that prices will move higher in the longer term.”
“Following a 30% reduction in capex levels by global exploration and production companies in 2015, we expect at least another 20% reduction this year and possibly more if prices stay lower for longer. Over the medium term this should help guarantee that the current supply overhang is alleviated.”
“A better longer-term supply/demand balance should start to filter through to global crude prices towards the close of 2017. Hence, we forecast Brent crude oil to average $70/bbl in Q4 2017.”