Oil Price Forecast - April 29
Posted: Mon Apr 29, 2019 8:18 am
Update from Raymond James 4-29-2019
As regular readers of our research are aware, for more than two years we have consistently maintained one of the most bullish oil price outlooks on the Street. As we explain today, our already upbeat global oil supply/demand model has recently become even more bullish due to potential supply reductions from five OPEC countries, including: Iran, Venezuela, Libya, Saudi Arabia, and the UAE. With recent events, we now expect global petroleum inventories to draw by an average of one million bpd over the next two years, with global inventories (on a days-of-consumption basis) set to fall to unprecedented extremely low levels in 2020. Furthermore, we expect OPEC excess capacity to fall to de-minimis levels by the end of this year!
Even though our oil price forecast has been well above consensus, better-than-expected performance of oil prices year-to-date is leading us to raise our 2019 WTI forecast from $62 to $66 and Brent from $72 to $74.50/Bbl.
We continue to believe that 2020 will be a cyclical-peak year due to IMO 2020 and maintain our forecast of $92.50 WTI and $100 Brent. Despite the changing oil market sentiment, our 2020 price deck still sits at the high end of Street expectations and is still 50% ABOVE the current futures strip.
The bottom line remains the same: oil prices must increase to high enough levels in order to meaningfully slow down 2020 global demand growth - and we think that means Brent oil prices back in the triple digits for the first time since 2014.
As regular readers of our research are aware, for more than two years we have consistently maintained one of the most bullish oil price outlooks on the Street. As we explain today, our already upbeat global oil supply/demand model has recently become even more bullish due to potential supply reductions from five OPEC countries, including: Iran, Venezuela, Libya, Saudi Arabia, and the UAE. With recent events, we now expect global petroleum inventories to draw by an average of one million bpd over the next two years, with global inventories (on a days-of-consumption basis) set to fall to unprecedented extremely low levels in 2020. Furthermore, we expect OPEC excess capacity to fall to de-minimis levels by the end of this year!
Even though our oil price forecast has been well above consensus, better-than-expected performance of oil prices year-to-date is leading us to raise our 2019 WTI forecast from $62 to $66 and Brent from $72 to $74.50/Bbl.
We continue to believe that 2020 will be a cyclical-peak year due to IMO 2020 and maintain our forecast of $92.50 WTI and $100 Brent. Despite the changing oil market sentiment, our 2020 price deck still sits at the high end of Street expectations and is still 50% ABOVE the current futures strip.
The bottom line remains the same: oil prices must increase to high enough levels in order to meaningfully slow down 2020 global demand growth - and we think that means Brent oil prices back in the triple digits for the first time since 2014.