OMS-October-2016

Oil Market Snapshot – October 2016

  • Brent held above $50/bbl for most of October as expectations of an OPEC production freeze at November’s meeting buoy the market, with OPEC’s agreement in principle to cut oil production resulting in Brent to surge by $5/bbl
  • Russia has also indicated some tentative commitments to join a freeze, but has a series of projects due for completion by 2020 totalling 1.41 million b/d capacity
  • We remain optimistic that a deal will be struck, but sceptical that it will do much more than improve sentiment
  • Saudi Arabia and its Gulf allies are likely to cut a maximum of 750,000 b/d to support the freeze, but this will be offset by increasing production from junior members
  • We forecast $42.87/bbl (+0.19/bbl on last forecast) and $53.54/bbl (+$1.33/bbl) for Brent in 2016 and 2017, respectively
  • Our global oil demand forecasts for 2016 and 2017 remain largely unchanged at 1.45 million b/d and 1.40 million b/d, respectively
  • North Dakota saw production fall below 1 million b/d in August for the first time since March 2014, though we expect a slight uptick in September

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