Baku, Azerbaijan, Aug.1
By Aygun Badalova - Trend:
Analysts of the US JP Morgan bank revised down 3Q’16 Brent and WTI average price forecasts to $48 a barrel and $47 a barrels.
“For now though we retain a more optimistic end September forecast of $50 a barrel on Brent and a slightly more cautious $49 a barrel on WTI,” analysts said in their monthly Oil Market report, obtained by Trend.
Lower demand growth forecasts and higher OPEC supply forecasts accompany this reduction in price outlook, they said.
The combined effect of these changes is to leave oil market balances facing smaller draws in 2Q, 3Q and 4Q’16, than envisaged in late June, according to the report.
Analysts also noted that oil prices have retreated further in recent weeks, calling into question the view that the oil market has entered a resolution phase.
Recent monthly data indicate that slowing demand growth is the primary driver of this shift in market dynamic, the analysts said.
At the same time, JP Morgan analysts made no changes to 4Q’16 and 2017. They still view the oil markets as more likely to see higher prices in the next 12-18 months, rather than a slump back into the doldrums seen in 1H’16.
Lower prices are cutting investment in conventional oil supply and shale oil supplies are projected to continue to decline for another two quarters, before stabilising, according to the analysts’ report.
Brent average price is projected by the analysts at $46.31 a barrel with $55 a barrel in the fourth quarter of the year.
WTI average price is projected at $45.32 a barrel in 2016 with $55 a barrel in the last quarter.
In 2017, both Brent and WTI prices are forecasted to average $56.75 a barrel with the highest price at $63 a barrel in the fourth quarter of the next year.
Oil rose August 1, driven by new orders as traders staked out positions at the start of the new month, but the market remains dogged by a crude glut, a flood of refined products, and an economic slowdown, Reuters reported.
Brent crude was at $43.74 per barrel at 0650 GMT (2:50 a.m. ET), up 21 cents from its last close in July, when it lost 12 percent over the month.
US WTI was at 41.70 per barrel, up 10 cents from July's last close. WTI shed 13 percent in July.