Analysts of the US JP Morgan bank revised down 3Q’16 Brent and WTI average price forecasts to $48 a barrel and $47 a barrels.
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Crude oil continues to fall on Monday following the commodity’s worst month in a year. This, and macroeconomic uncertainty, means the imbalance between demand and supply is likely to persist for a while longer, the note said.
The combined effect of these changes is to leave oil market balances facing smaller draws in 2Q, 3Q and 4Q’16, than envisaged in late June, according to the report.
“The economy is projected to continue to see a slower recovery in fiscal 2016, negatively affected by the yen’s appreciation and a rise in crude oil prices amid the continued slowdown in overseas economies”, it said in the weekend statement.
But analysts said the uptick was unlikely to be sustained.
WTI crude futures are almost 20% lower from their 2016 highs above $50 a barrel scaled in early June, technically placing it in bear market territory, as signs of an ongoing recovery in US drilling activity combined with elevated stocks of fuel products weighed. Brent prices ended July with a monthly loss of 12.7% as prospects of increased exports from Middle Eastern and North African producers, such as Iraq, Nigeria and Libya, added to concerns that a glut of oil products will cut demand for crude by refiners. West Texas Intermediate crude retreated 5.9 percent last week to settle at $41.60 per barrel.
Brent crude futures are expected to average $58.63 per barrel in 2017, rising to $66.28 in 2018, the poll showed.
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Oil rose August 1, driven by new orders as traders staked out positions at the start of the new month, but the market remains dogged by a crude glut, a flood of refined products, and an economic slowdown, Reuters reported. Exports fell 10.2 percent on-year to $41.05 billion in July, their biggest fall since April this year. This August, U.S. oil prices declined 14 percent, its poorest monthly performance since last July.
