Barclays analysts have slashed their oil-price forecast for 2016 as nothing seems to suggest prices will bounce quickly.
With oil buying and selling at levels that appeared inconceivable not too way back, Barclays’ Kevin Norrish and Michael Cohen revised their prior expectations in a note to purchasers on Monday.
They lowered their forecast for the average worth of Brent and West Texas Intermediate crude oil the international and US benchmarks to $37 a barrel this year, down from $60 and $fifty six previously.
From the observe:
For a while now now we have taken the view that situations had been falling in to place for a strong recovery in oil in 2016, doubtlessly taking prices again above $70/barrel by year finish. However, in current weeks there was a marked deterioration in oil market fundamentals, and world macro-financial circumstances and prices have fallen additional than we expected. Consequently, we are lowering considerably our oil value expectations for the yr forward.
The agency still expects oil costs to rise in the second half of the yr, however from a much lower degree than they as soon as thought.
On Tuesday, WTI fell to a 12-yr low of $29.93 a barrel.
Simply put, the analysts say right this moment’s landscape, dominated by oil oversupply and a powerful dollar, doesn’t support their earlier call for $60 oil this yr. The analysts identified three predominant drivers for their forecast reduce.
First is the 12-member oil cartel OPEC. The group didn’t agree on a production ceiling in December and abandoned the sway it had held on oil supply and prices. And member international locations have ignored and exceeded the target for a number of months anyway.