Oil Price Forecasts for 2019

[dan_s]

Friday, December 28, 2018

Wall Street: Oil prices will rebound. Most major investment banks are forecasting a rebound in oil prices in 2019. Price forecasts vary widely, but most have both WTI and Brent above current spot prices. Bank of America Merrill Lync, for instance, sees WTI averaging $59 per barrel in 2019. Citi is at the bearish end with a $49 price target. For Brent, Barclays says the benchmark will average $72, and a half dozen other investment banks have price estimates within a few dollars of that price.

https://www.cnbc.com/2018/12/21/wall-st ... -risk.html

Raymond James forecast is average price per quarter for WTI of:
$52 in Q1 2019
$56 in Q2 2019
$65 in Q3 2019 < Full impact of OPEC+ production cuts plus annual spike in summer demand
$75 in Q4 2019 < Market realization of what IMO 2020 regulations will do to supply (cut 2 million barrels per day)
$92.50 in 2020 < IMO 2020 + falling supply thanks to 2019 capex spending (the chickens come home to roost)

Wells Fargo says $65/bbl is the "Right Price" for WTI and they expect it to be there by mid-2019.

For my forecasts, I am assuming WTI will average:
$50 in Q1 2019
$55 in Q2 2019
$60 in Q3 2019
$65 in Q4 2019 and all of 2020

If Raymond James ends up being right, the upside in our Sweet 16 is approximately double the valuations in the December newsletter.