I just got off the phone with one of the top energy sector analyst at Raymond James. I wanted to confirm their outlook for oil prices.
Raymond James has confirmed the forecast they put out on January 4. It is based primarily on a tightening of global supply/demand that they see coming around mid-Q2.
Here is their official price deck for West Texas Intermediate:
Q1 2016: $35
Q2 2016: $40
Q3 2016: $60
Q4 2016: $65
YR 2017: $75
They forecast the Brent-WTI spread widening to $4.00/bbl by Q4.
This may help you understand their optimism: http://www.bloomberg.com/news/articles/ ... xaggerated
My forecast models use a more conservative price deck, but I definitely see the chance for demand to exceed supply within six months. Also, although I do not believe an OPEC + Russia agreement to hold production flat as being much of a change for the physical market, I do think it would chance the mood of the traders and take prices higher. Obviously, the supply problems in Nigeria, Iraq and Venezuela will also tighten the market. Read this: http://www.thestar.com/news/world/2016/ ... ights.html
Oil Price Forecast
Oil Price Forecast
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price Forecast
The emerging markets are the engine of oil
demand growth. China has been the fastest
growing user of oil over the last decade,
making it now the second biggest consumer of
oil after the U.S. China’s demand has more
than doubled since 2000, growing from less
than 5 million barrels per day to over 11 million
barrels per day (Source: EIA). That seems
impressive until you realize that China’s oil
usage, per‐person, is still only about one seventh
what it is in the U.S. (2.9 barrels per
person per year in China, versus nearly 22 in
the U.S.).
Despite concerns over slowing
growth, China’s oil demand still grew by 4.8%
in 2015 and is expected to grow by another
4.3% in 2016 – an increase of nearly a half
million barrels per day – according to the China
National Petroleum Corporation (CNPC).
Certainly, China’s GDP growth has slowed in
recent years, and there are concerns that it is
heading for a recession. Even if oil demand
growth in China does slow on a relative basis,
there’s still a tremendous amount of room for
growth in absolute terms.
But China isn’t the only emerging market of
major importance for oil. Keep an eye on India,
which will continue to be a powerful driver of
global growth and increased oil demand in the
years ahead. India has already demonstrated
a strong appetite for oil, with total
consumption nearly doubling between 2000
and 2015, rising from around 2 million
bbls/day to nearly 4 million bbls/day. Still, on
a per‐capita basis, its usage remains modest.
While India’s per capita oil usage has increased
by 50% over the last 15 years, at 1.2 barrels per
person per year today, it’s still less than half
that of China.
Since India has a population nearly as large as
China’s – and a faster population growth rate
– this means India still has a huge amount of
room to grow in terms of oil usage, both on a
relative and absolute basis. Even if renewable
technologies play an increasing role in the
energy make‐up of these emerging markets,
oil will continue to be relied upon in huge and
increasing amounts due to its energy density,
its portability (meaning, the ease with which it
can be transported to remote areas of
emerging markets without specialized new
infrastructure like gas pipelines or power
lines), and its relatively low cost (even at $80
or $100 per barrel).
Source: White Paper on Oil Supply/Demand by Ridgewood Private Equity Partners dated March 2016
demand growth. China has been the fastest
growing user of oil over the last decade,
making it now the second biggest consumer of
oil after the U.S. China’s demand has more
than doubled since 2000, growing from less
than 5 million barrels per day to over 11 million
barrels per day (Source: EIA). That seems
impressive until you realize that China’s oil
usage, per‐person, is still only about one seventh
what it is in the U.S. (2.9 barrels per
person per year in China, versus nearly 22 in
the U.S.).
Despite concerns over slowing
growth, China’s oil demand still grew by 4.8%
in 2015 and is expected to grow by another
4.3% in 2016 – an increase of nearly a half
million barrels per day – according to the China
National Petroleum Corporation (CNPC).
Certainly, China’s GDP growth has slowed in
recent years, and there are concerns that it is
heading for a recession. Even if oil demand
growth in China does slow on a relative basis,
there’s still a tremendous amount of room for
growth in absolute terms.
But China isn’t the only emerging market of
major importance for oil. Keep an eye on India,
which will continue to be a powerful driver of
global growth and increased oil demand in the
years ahead. India has already demonstrated
a strong appetite for oil, with total
consumption nearly doubling between 2000
and 2015, rising from around 2 million
bbls/day to nearly 4 million bbls/day. Still, on
a per‐capita basis, its usage remains modest.
While India’s per capita oil usage has increased
by 50% over the last 15 years, at 1.2 barrels per
person per year today, it’s still less than half
that of China.
Since India has a population nearly as large as
China’s – and a faster population growth rate
– this means India still has a huge amount of
room to grow in terms of oil usage, both on a
relative and absolute basis. Even if renewable
technologies play an increasing role in the
energy make‐up of these emerging markets,
oil will continue to be relied upon in huge and
increasing amounts due to its energy density,
its portability (meaning, the ease with which it
can be transported to remote areas of
emerging markets without specialized new
infrastructure like gas pipelines or power
lines), and its relatively low cost (even at $80
or $100 per barrel).
Source: White Paper on Oil Supply/Demand by Ridgewood Private Equity Partners dated March 2016
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price Forecast
we closed today around $38.49 for WTIC
just from a technical view, the recent $WTIC rally got ahead of itself, now needs time to relieve the overbought condition
the rally took $WTIC from $27/bbl to $42/bbl (+55%) in about 5 weeks, where it found strong resistance at the 200ema ($42.38) ...that would indicate it's going to retest the 50ema as a minimum
a 38% fib retrace of $WTIC would find support around the 50ema and the Dec-2015 price band ($35-$36 band) ...another 3 bucks lower
if that doesn't hold, the 50% retrace of $WTIC would find support around the double-bottom hump ($34) seen end of Jan-16
just from a technical view, the recent $WTIC rally got ahead of itself, now needs time to relieve the overbought condition
the rally took $WTIC from $27/bbl to $42/bbl (+55%) in about 5 weeks, where it found strong resistance at the 200ema ($42.38) ...that would indicate it's going to retest the 50ema as a minimum
a 38% fib retrace of $WTIC would find support around the 50ema and the Dec-2015 price band ($35-$36 band) ...another 3 bucks lower
if that doesn't hold, the 50% retrace of $WTIC would find support around the double-bottom hump ($34) seen end of Jan-16