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6 Aug 2015
Crude oil prices look southwards – BAML
FXStreet (Edinburgh) - The bearish tone in crude oil prices remains intact, according to analysts at BAML, who revised lower their forecasts for the upcoming months.
Key Quotes
“As the US driving season peaked on July 4, WTI and Brent crude oil faltered and are down by over $11 and $9/bbl, respectively”.
“Also, oil prices have suffered from negative macro news from China and renewed strength in the trade-weighted USD. To top it up, an Iranian nuclear deal has allowed more barrels to seep into the market from floating storage, with the first cargo already hitting East Africa’s shores”.
“Seasonal demand weakness and renewed USD strength could continue to press oil lower going forward. So we lowered our end-of-3Q15 targets to $45/bbl for WTI, from $50/bbl prior, and to $50/bbl for Brent, from $54/bbl prior”.
“The imbalance between global oil supply and demand peaked in 2Q15. But the glut in the coming quarters will continue, averaging 1 million b/d over the next 18 months”.
“OPEC is largely to blame for this imbalance, with Saudi Arabia, Iraq, the UAE and now Iran raising crude output into a falling price environment”.
“In non-OPEC, output also defied expectations of sharper declines, especially in Russia and Brazil. On a positive note, oil demand has surprised to the upside but only due to low oil prices, as cyclical drivers remain weak. We believe demand can continue to absorb some of the imbalances, provided prices stay low”.
Key Quotes
“As the US driving season peaked on July 4, WTI and Brent crude oil faltered and are down by over $11 and $9/bbl, respectively”.
“Also, oil prices have suffered from negative macro news from China and renewed strength in the trade-weighted USD. To top it up, an Iranian nuclear deal has allowed more barrels to seep into the market from floating storage, with the first cargo already hitting East Africa’s shores”.
“Seasonal demand weakness and renewed USD strength could continue to press oil lower going forward. So we lowered our end-of-3Q15 targets to $45/bbl for WTI, from $50/bbl prior, and to $50/bbl for Brent, from $54/bbl prior”.
“The imbalance between global oil supply and demand peaked in 2Q15. But the glut in the coming quarters will continue, averaging 1 million b/d over the next 18 months”.
“OPEC is largely to blame for this imbalance, with Saudi Arabia, Iraq, the UAE and now Iran raising crude output into a falling price environment”.
“In non-OPEC, output also defied expectations of sharper declines, especially in Russia and Brazil. On a positive note, oil demand has surprised to the upside but only due to low oil prices, as cyclical drivers remain weak. We believe demand can continue to absorb some of the imbalances, provided prices stay low”.