Global oil demand seen falling; ‘cocktail for weaker prices’

Viewed by: 91
Not rated yet
Global oil demand seen falling; ‘cocktail for weaker prices’ Lower oil demand and higher non-Opec oil supply could tilt the market into a small surplus, prompting Opec to trim output, says Bank of America Merril
11:45 PM
30
May
2013

 

Lower demand, rising prices and higher inventories may see a drop in oil prices in the remaining part of this year and in 2014, the Bank of America Merrill Lynch has said.

The Bank of America Merrill Lynch has cut down its global oil demand growth this year due to “slightly weaker than expected consumption in Europe and China”.

In a report released yesterday BOAML said lower global oil demand, rising supplies and higher inventories are “a cocktail for lower prices”.

Consequently, BOAML has lowered its Brent crude oil price forecast to $103 per barrel in the second half of this year from $111 projected earlier.

“As we expect this weakness to persist into 2014, we now believe that oil prices will also fail to push much higher next year, and we reduce our 2014 average Brent crude oil forecast to $105/b from $112/b earlier,” it said.

Brent crude is a major trading classification of sweet light crude oil, which is sourced from the North Sea.

In November, 2012 BOAML had expected global oil demand to grow by 0.95mn bpd in 2013. It has now revised this number down to 0.8mn bpd on what the bank said “slightly weaker than expected consumption in Europe and China.”

It has also cut down its 2014 projections for global oil demand growth for 2014 to just 1.2mn bpd mostly on slightly weaker emerging markets’ growth.

“Yet, while demand has turned out to be softer than we previously anticipated, oil supply growth is running at a faster pace,” Bank of America Merrill Lynch said.

The bank also sees global oil supplies growing faster this year. According to Bank of America Merrill Lynch, the non-Opec supply will grow by 820,000bpd this year and 910,000bpd next year, compared to 700,000bpd and 815,000bpd previously.

Since November, US oil output alone has exceeded even “optimistic forecasts” by 400,000 to 500,000bpd in Q4, 2012 and Q1, 2013, although production in some other non-Opec countries has continued to disappoint.

“In sum, the combination of lower demand and higher supply could tilt the oil market into a small surplus over the next 18 to 24 months,” BOAML said.

The bank’s researchers also project price in the range of $90 to $100 a barrel between 2015 and 2020 as they see less of a structural oil market deficit on softer emerging markets activity and the rise in non-conventional oil supplies.

“In our view, there is a growing chance that Brent will move down structurally to a $90-100/barrel band after 2014. This price range is in line with our equity research team’s long term oil price assumption of $100/b and a forward Brent price of $90/b in December 2017,” the report said.

Although BOAML is bringing down its Brent crude oil price assumptions, it leaves its second half and 2014 central projections for landlocked West Texas Intermediate (WTI) crude oil unchanged at $91/b and $92/b respectively.

 

 

 

 

 



Add to:

Add Comment
Please make sure the following errors to complete the comment
  • Please write a comment first
  • Sorry.. You cannot use HTML code here
  • Sorry.. you have exceeds the maximum charcter limit
Disclaimer: To use comment service please Login To add your picture and your name to your comments and the appearance of comment in less time
guest
guest
guest
(guest@site.com)
Select Mood Normal Cry Happy Nice Shcoked

Number of characters allowed no more than 1000 Letter

Adding a comments means you have read and agreed onComments Posting ProtocolsAnd You bear the moral and legal responsibility for the publication of this comment on Gulf times portal.
Readers mood after comment
Comments /Number of comments (0)
Order Comments
الصفحة 1 من 0
رقم الصفحة اذهب

Report Abuse

Choose Abuse Reason
  • advertising
  • Not related to subject
  • Offensive
  • Wrong Words
Send
Gulf Times SERVICES
Weather
Prayer times
Newsletter
Currency conversion
Embassy Services

* RequiredFields

Sender Name*
Sender E-mail*
Receiver Name*
Receiver E-mail*
Message