Raymond James raised their oil price forecast
Posted: Tue Jun 21, 2016 10:33 am
Energy Stat: Like $50 Oil? You Ain't Seen Nothing Yet - Raising 2017 WTI Forecast to $80
The key point to hammer home is this: Our oil model has recently turned meaningfully more bullish and our 2017/2018 oil price forecasts are now even higher than our previous (January) oil price outlook (that was already considerably more bullish than most on the Street). After receiving plenty of "funny looks" at the beginning of this year - especially during oil's February bottom - we are largely seeing our bullish oil thesis play out. Our oil model is more bullish largely due to recent changes in the following three oil supply issues: 1) organic declines outside the U.S. are steeper than expected; 2) there have been numerous unforeseen production outages; and 3) logistical bottlenecks are set to constrain the U.S. production recovery in 2017/2018. On the demand side, 2016 growth is also tracking modestly ahead of our original expectations. Putting it all together, global oil inventories over the next six to 12 months should draw down faster and further than we previously anticipated. In response, we are raising our 2017 forecast for WTI (from $75 to $80) and Brent (from $79 to $83) - this marking the cyclical peak of the oil recovery. Similarly, we are initiating a 2018 forecast for WTI ($75) and Brent ($80). We are reiterating our long-term forecast of $70 for WTI and $75 for Brent.
The key point to hammer home is this: Our oil model has recently turned meaningfully more bullish and our 2017/2018 oil price forecasts are now even higher than our previous (January) oil price outlook (that was already considerably more bullish than most on the Street). After receiving plenty of "funny looks" at the beginning of this year - especially during oil's February bottom - we are largely seeing our bullish oil thesis play out. Our oil model is more bullish largely due to recent changes in the following three oil supply issues: 1) organic declines outside the U.S. are steeper than expected; 2) there have been numerous unforeseen production outages; and 3) logistical bottlenecks are set to constrain the U.S. production recovery in 2017/2018. On the demand side, 2016 growth is also tracking modestly ahead of our original expectations. Putting it all together, global oil inventories over the next six to 12 months should draw down faster and further than we previously anticipated. In response, we are raising our 2017 forecast for WTI (from $75 to $80) and Brent (from $79 to $83) - this marking the cyclical peak of the oil recovery. Similarly, we are initiating a 2018 forecast for WTI ($75) and Brent ($80). We are reiterating our long-term forecast of $70 for WTI and $75 for Brent.