If you’re a shipper or transportation company, in the new year, the first few months can provide insight into budget and costs” Here are results from a recent survey by Reuters.
Low oil prices are likely to linger as analysts dropped their predictions further for 2016, according to a Reuters poll, assuming OPEC will not cut output when it meets Dec. 4. The average price forecast for benchmark North Sea Brent crude futures for 2016 at $57.95 a barrel is 57 cents below last month’s poll, the survey of 31 analysts showed.
Analysts surveyed by Reuters have become increasingly bearish as the year has worn on. Six months ago, the monthly poll showed they expected Brent to average $70.90 next year and they have cut their estimates every month since then. OPEC is determined to keep pumping oil vigorously despite the resulting financial strain even on the policy’s chief architect, Saudi Arabia, alarming weaker members who fear prices may slump further towards $20. Standard & Poor’s rating agency forecasts Saudi Arabia’s budget deficit will rocket to 16% of GDP in 2015 from 1.5% in 2014.
“There is no reason for Saudi Arabia to change its strategy because it’s working and needs to continue this a little while longer in order to entrench the gains it has achieved.” Analysts say OPEC will not re-evaluate its policy before mid-2016 when it has a scheduled meeting. Oil demand growth will be subdued compared to last year, analysts said. “Declining demand growth should keep inventory withdraw rates rather tepid, prolonging the period required for the industry to absorb the multi-year high stockpiles,” said Giorgos Beleris, analyst from Thomson Reuters’ Oil Research and Forecasts.
U.S. crude is expected to average $53.73 a barrel next year, compared with last month’s forecast of $54.4. West Texas Intermediate crude has averaged $49.95 so far in 2015. Nine of the 29 respondents who participated in last month’s poll lowered their forecasts this month
U.S. Oil Wells, price forecasted to decline in 2016
for the outlook for Brent crude oil prices in 2016.
Article courtesy of: Transport Topics, American Trucking Associations Inc.