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Moderate recovery expected in oil prices – analysts

27 April 2015 09:26 (UTC+04:00)
Moderate recovery expected in oil prices – analysts

By Aygun Badalova

Oil prices in the world markets have slightly strengthened their positions by reaching $65 per barrel for the North Sea Brent Blend and $57 per barrel for the US WTI oil.

Despite the slight increase, the oil prices, in particular, those for the US brand remain at a relatively low level and the increase of the US crude inventory undermines their recovery. American Petroleum Institute said that the country’s oil reserve increased by 5.5 million barrels as of the last week.

The US Energy Information Administration said that the country’s crude stockpiles increased by 5.3 million barrels and stood at 489 million through April 17.

At the same time, the news from the Middle East continue backing up the quotes.

The information from Yemen about Saudi Arabia’s attack despite the announcement about the end of the military operations in the country led to the new record in oil prices for 2015 on Apr.24.

The price of June futures for Brent increased by 0.38 percent and reached $65.1 per barrel as a result of the trading on June 24.

Nevertheless, analysts do not rush to change their forecasts on the further dynamics of oil prices. The analysts forecast slight increase of quotes in the short and medium term.

The analysts of the UK Capital Economics consulting company forecast that the prices for Brent will be only $70 per barrel by 2020.

British analysts forecast the average price for Brent at $60 per barrel in 2015 and $65 per barrel in 2016. The average price for WTI is forecasted at $55 per barrel in 2015 and $60 per barrel in 2016.

The analysts of the US JP Morgan bank expect the average price for Brent to be $59.3 per barrel in 2015 and $61.8 per barrel in 2016. This is while the US analysts forecast the average price for WTI at $51.8 per barrel in 2015 and $53.8 per barrel in 2016.

This is while EIA forecasts that the average price for Brent will be $59 per barrel in 2015 and $75 per barrel in 2016. The prices for WTI in 2015 and 2016 are expected to average $7/bbl and $5/bbl below Brent, respectively.

Nevertheless, EIA said in its short-term energy outlook that in the case of lifting the sanctions imposed on Iran, the forecasts for oil prices can be reduced by $5-$15 per barrel.

The International Energy Agency forecasts the average price of Brent at $75.03 per barrel and WTI prices at $70 per barrel in 2016. These forecasts do not take into account the possible increase of oil production in Iran in the case of lifting the sanctions imposed on it.

The European investment bank, Saxo Bank, registered in Denmark forecasts that the price for Brent will not exceed $70 per barrel by 2015.

Ole Hansen, head of commodity strategy at Saxo Bank said that 3,000 uncompleted wells in the US are just waiting for the signal from higher oil prices and that will limit the upside. He added that Brent looks likely to settle into a $50-70/barrel range by late 2015.

The price for the US WTI brand will drop to $40 per barrel in the coming three months, according to the forecast of the US Goldman Sachs company. Analysts expect the prices to rise to $65 per barrel in the H2 of 2016 against the backdrop of significant decrease in the number of drilling rigs in the US, as well as weakening of activities of large oil companies on capital expenditures.

The analysts from the Bank of America Merrill Lynch forecast that the price for WTI oil will reach $41 per barrel, while the price of Brent oil will be equal to $48 per barrel as of Q2 of 2015.

Forecasts for oil prices for 2015-2016 (dollar per barrel)

Company

2015 - Brent

2015 - WTI

2016 - Brent

2016 - WTI

Capital Economics

60

55

65

60

JP Morgan

59.3

51.8

61.8

53.8

EIA

59

52

75

70

International Energy Agency

-

-

75.03

70

Saxo Bank

50-70

-

-

-

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