This month saw oil finally pushing up past the US$50 per barrel mark. According to a team of US analysts, it is likely it won’t stop here.
US financial analysts Raymond James & Associates are offering one of the most optimistic outlooks on crude oil prices, raising its forecast for 2017 and 2018 by US$5 per barrel.
“We are raising our 2017/2018 oil price forecasts by US$5. Specifically, our 2017 forecast for WTI increases from US$75 to US$80 and Brent increases from US$79 to US$83 – this marking the cyclical peak of the oil recovery”, a report reads.
Oil Price To Rebound Claim Analysts
“Similarly, we are initiating a 2018 forecast for WTI (US$75) and Brent (US$80), which is US$5 higher than our previous long-term deck”, the organisation added.
According to Raymond James’ report, this positive turn on crude oil prices was based on various factors that recently turned “meaningfully more bullish”, all linked to a widespread decline in global oil supply.
“Over the past few months, we’ve gained even more confidence that tightening global oil supply/demand dynamics will support a much higher level of oil prices in 2017”, it explained.
“When we factor in modestly higher 2016 global oil demand growth, our global oil model has become meaningfully more bullish (or tighter)”, it added.
Significant Decline In Oil Stock
Overall, Raymond James foresees a decline in oil stock by 400,000 – 700,000 barrels, compared to its previous estimates.
The organisation justifies this with a series of unplanned supply outages which are expected to be maintained throughout 2017.
While production outside the US will suffer a bigger decline than anticipated, China, Columbia, Angola and Mexico are also expected to contribute with structural declines in their oil production.
With an expected rise in fuel demand, this is expected to give rise to a significant increase in crude prices.
The analysts maintained their long-term forecast of US$70 WTI and US$75 Brent for 2019 and beyond.Last updated on 05:25PM - 23/06/16