29 July 2016, London — Oil analysts still expect a rise in the crude price this year, thanks to improving demand growth that should help offset any bearish headwinds from a stubborn supply surplus, a Reuters poll showed on Friday.
A survey of 29 economists and analysts forecast Brent crude will average $45.51 per barrel in 2016, up marginally from last month’s forecast of $45.20, and about $3.55 higher than the $41.96 average so far this year.
“We project solid global demand growth in 2016 (1.4 million barrels per day), and a reasonable growth in 2017 (+1.1 MMBbl/d), mostly driven by China, India and Africa. As such, demand should help to drive prices higher,” said Raymond James analyst Luana Siegfried.
This is the fifth straight upward revision in forecasts for the North Sea crude benchmark.
Oil prices are still some 60 percent above the near 13-year lows seen in January this year, but have retreated from 2016 highs above $50 a barrel, as a growing glut of refined products could force more unwanted crude into storage, analysts said.
Global supply is still greater than demand, but production disruptions, often through geopolitical instability, have helped to erode part of the prevailing overhang, according to Giorgos Beleris, analyst at Thomson Reuters’ Oil Research and Forecasts.
The poll showed analysts expect Brent crude futures to average around $51.15 a barrel in the fourth quarter, as supply demand dynamics improve.
“Geopolitical risks remain the price supporting factor,” with the risk of terror attacks in the West and in the Middle East, said Carsten Fritsch, analyst at Commerzbank.
A series of militant attacks on oil infrastructure this month has cut Nigerian output and repairs are expected to take at least another month.
Libya meanwhile is facing a blockade at key oil terminals due to protests against a turbulent political backdrop.
A sudden return of exports from either country could put pressure on oil prices, but Commerzbank’s Fritsch said this was unlikely in the near term.
Brent crude futures are expected to average $58.63 per barrel in 2017, rising to $66.28 in 2018, the poll showed.
The survey forecast U.S. WTI crude futures to average $44.12 a barrel in 2016, up from last month’s forecast of $43.90. U.S. crude oil has averaged $40.47 this year so far.
Raymond James had the highest 2016 Brent forecast at $53.15 per barrel, while the Economist Intelligence Unit had the lowest at $40.34.
*Arpan Varghese; Nithin Prasad; Editing – Amanda Cooper & David Evans – Reuters