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Absence of consensus underlines Brent Q1 price forecasts

Oil-market analysts have forecast a $25 a barrel range in average Brent prices in the first three months of 2016. But all agree that the global crude benchmark will rise by at least $5/b by the end of the year

Of the banks and consultancies surveyed by Petroleum Economist Norwegian bank DNB Nor was the most bullish on Brent prices for the January-March period, forecasting an average of $55/b.

Barclays was the most bearish, expecting Brent prices over the first quarter to average just $30/b.

The average of the forecasts was $43.67/b. This compares with an average Brent price forecast from the analysts for the April-June period of $47.66/b.

Petroleum Economist surveyed six forecasters: Energy Aspects, DNB Nor, Barclays, BNP Paribas, ABN Amro and Morgan Stanley.

Front-month Brent prices averaged $54.97/b in the first quarter of 2015, just over half the average price of $107.84/bQ1 2014.

Energy Aspects is forecasting fourth quarter Brent will average $69/b, or $25/b above its average in the first quarter..By the end of the year, analysts expect Brent prices will rise as cuts to capital expenditure start to curb upstream activity, hurting global crude production.

Brent forecasts

But Barclays is the least bullish on its fourth quarter Brent price forecasts too. The bank expects Brent prices to trade at $43/b for Q4, just $13/b higher than in Q1 2016. For the year as a whole, Barclays expects both Brent and WTI to average 37/b, sharply down on its previous forecasts for $60/b and $56, respectively.

"We see limited upside for Brent (and range-bound but volatile) pricing over the next 12 months. Demand has been and should remain fairly robust," the bank said in a report released on 11 January. "However, the addition of new supply from Iran will likely keep the market oversupplied well into 2016 and defer any need to incentivise US supply growth until 2017."

 

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