Investing.com – Barclays (LON:BARC) cut their forecast for Brent prices at the end of 2018 on Friday, but insisted they remained bullish with their outlook for crude.
Specifically, these analysts reduced their estimate for the London barrel to $67 from $77 previously.
“We maintain our bullish stance, as that price is still over $10 higher than the futures curve,” they explained.
They also left their average price forecast for 2017 unchanged at $57, while noting that their second quarter forecast was for $62.
These analysts acknowledge what they called a “game of musical chairs” as U.S. shale producers ramp up production and other output disruptions get resolved.
“Assuming that OPEC’s cuts are not extended in their current form, 2018 is likely to feature higher levels of volatility as stocks continue to draw and as OPEC spare capacity decreases,” they said.
The British banks forecast for West Texas Intermediate oil is $56 for 2017 and $65 for 2018.
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In my forecast models, I am using $60/Bbl for WTI in 2H 2017 and 2018. - Dan
Global Oil Market - Feb 24
Global Oil Market - Feb 24
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Global Oil Market - Feb 24
From OilPrice.com - Friday, February 24, 2017
Oil prices gained some ground this week on the drawdown in gasoline stocks in the U.S., which the markets interpreted as a sign that the glut could be easing. However, on Friday, oil prices fell back a bit on concerns that there is still just too much supply out there.
Gasoline stocks fall, crude stocks rise slightly. 2017 has brought remarkable increases in the inventory levels for crude oil and gasoline, both of which hit record highs this month. The buildups have threatened to erase the price gains achieved since OPEC announced its deal late last year. The latest data from EIA offered a bit of encouragement, revealing a 2.6-million-barrel drawdown for gasoline, although crude stocks rose by 0.6 million barrels. Investors chose to focus on the improving gasoline figures, and oil prices traded up more than 1 percent on Thursday. They apparently sobered up on Friday, and oil was down about 1 percent during early trading hours.
ExxonMobil lowers reserve estimate by 3.3 billion barrels. ExxonMobil (NYSE: XOM) removed 3.3 billion barrels from its books this week, as low prices threaten to leave those reserves in the ground. The reserves are located in Canada’s oil sands, some of the most expensive sources of oil in the world. The move comes after ConocoPhillips (NYSE: COP) de-booked more than one billion reserves in Canada as well. The move is a sign of the struggle for Canada’s oil sands to compete in a world of much lower spending levels. Beyond the projects that are already under development, Canada’s oil sands could see fewer and fewer greenfield projects get off the ground.
U.S. oil exports hit another record. U.S. crude exports broke another record this past week, shipping 1.21 million barrels per day for the week ending on February 17. The oil export ban was only lifted at the end of 2015, and after some relatively small levels of exports throughout most of 2016, exports have accelerated dramatically this year. The sudden uptick in exports comes because crude oil inventories in the U.S. are overflowing and the WTI benchmark is trading at a discount to the more internationally-linked Brent marker, meaning U.S. crude is cheaper than other sources of oil, making it more attractive.
Aramco not worth as much as Saudi Arabia says? The Saudi government is preparing an IPO for 2018 or 2019 for a small portion of its state-owned oil company. Saudi Aramco, government officials say, is probably worth around $2 trillion, which would make it by far the most valuable company in the world. However, that could be vastly overstating the case. Consulting firm Wood Mackenzie says the core business of Aramco is only worth $400 billion. If that estimate is more accurate, the IPO would earn the government only a fraction of the $100 billion it hoped it would raise by selling off 5 percent of the company. There is a great deal of uncertainty, given the secrecy with which Aramco treats its operations and assets, and the discrepancy in estimates is illustrative of the complexity of taking Aramco public.
Commodity markets to remain in “holding pattern.” Goldman Sachs says that despite the recent uptick in prices for all sorts of commodities, including crude oil, further gains will be contingent upon forthcoming data showing that demand is growing. Investors have grown incredibly bullish, particularly on oil, building up record net-long positions. Despite the bullish bets, oil prices might not move up until the fundamentals show real proof of improving. “In other words, ‘show me the activity’; real demand, real stock draws and empty warehouses,” Goldman said in a research note. < As I have been saying for months in my weekly podcasts, crude oil is "range bound" ($50 to $55 for WTI) until Q2 when the impact of OPEC production cuts and the annual increase in demand shows up. February - April is the low point for global demand. - Dan
Oil prices gained some ground this week on the drawdown in gasoline stocks in the U.S., which the markets interpreted as a sign that the glut could be easing. However, on Friday, oil prices fell back a bit on concerns that there is still just too much supply out there.
Gasoline stocks fall, crude stocks rise slightly. 2017 has brought remarkable increases in the inventory levels for crude oil and gasoline, both of which hit record highs this month. The buildups have threatened to erase the price gains achieved since OPEC announced its deal late last year. The latest data from EIA offered a bit of encouragement, revealing a 2.6-million-barrel drawdown for gasoline, although crude stocks rose by 0.6 million barrels. Investors chose to focus on the improving gasoline figures, and oil prices traded up more than 1 percent on Thursday. They apparently sobered up on Friday, and oil was down about 1 percent during early trading hours.
ExxonMobil lowers reserve estimate by 3.3 billion barrels. ExxonMobil (NYSE: XOM) removed 3.3 billion barrels from its books this week, as low prices threaten to leave those reserves in the ground. The reserves are located in Canada’s oil sands, some of the most expensive sources of oil in the world. The move comes after ConocoPhillips (NYSE: COP) de-booked more than one billion reserves in Canada as well. The move is a sign of the struggle for Canada’s oil sands to compete in a world of much lower spending levels. Beyond the projects that are already under development, Canada’s oil sands could see fewer and fewer greenfield projects get off the ground.
U.S. oil exports hit another record. U.S. crude exports broke another record this past week, shipping 1.21 million barrels per day for the week ending on February 17. The oil export ban was only lifted at the end of 2015, and after some relatively small levels of exports throughout most of 2016, exports have accelerated dramatically this year. The sudden uptick in exports comes because crude oil inventories in the U.S. are overflowing and the WTI benchmark is trading at a discount to the more internationally-linked Brent marker, meaning U.S. crude is cheaper than other sources of oil, making it more attractive.
Aramco not worth as much as Saudi Arabia says? The Saudi government is preparing an IPO for 2018 or 2019 for a small portion of its state-owned oil company. Saudi Aramco, government officials say, is probably worth around $2 trillion, which would make it by far the most valuable company in the world. However, that could be vastly overstating the case. Consulting firm Wood Mackenzie says the core business of Aramco is only worth $400 billion. If that estimate is more accurate, the IPO would earn the government only a fraction of the $100 billion it hoped it would raise by selling off 5 percent of the company. There is a great deal of uncertainty, given the secrecy with which Aramco treats its operations and assets, and the discrepancy in estimates is illustrative of the complexity of taking Aramco public.
Commodity markets to remain in “holding pattern.” Goldman Sachs says that despite the recent uptick in prices for all sorts of commodities, including crude oil, further gains will be contingent upon forthcoming data showing that demand is growing. Investors have grown incredibly bullish, particularly on oil, building up record net-long positions. Despite the bullish bets, oil prices might not move up until the fundamentals show real proof of improving. “In other words, ‘show me the activity’; real demand, real stock draws and empty warehouses,” Goldman said in a research note. < As I have been saying for months in my weekly podcasts, crude oil is "range bound" ($50 to $55 for WTI) until Q2 when the impact of OPEC production cuts and the annual increase in demand shows up. February - April is the low point for global demand. - Dan
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group