Oil Cover

Oil Market Snapshot – January 2015

  • Brent fell to $47.25/bbl on 14th January, its lowest level for five and half years, due to record inventories and weaker oil demand. Overproduction has led to a continued surplus in the market
  • Global oil demand in 2014 averaged 92.4 million b/d, +0.6 million b/d y-o-y, the weakest growth since 2010
  • We expect higher demand growth of 0.97 and 1.22 million b/d in 2015 and 2016, respectively, in part supported by lower oil prices
  • Recent company announcements indicate capex cuts in the 20-25% range, significantly ahead of our initial forecast (December 2014)
  • US LTO output growth is under strong pressure from low prices with the oil rig count plummeting
  • Oil sands will be impacted by delays and in some cases operator liquidations, leaving their projects orphaned
  • Some deepwater projects also suffer delays, due to technical and political issues and not primarily due to low prices
  • Non-OPEC production growth for 2015 may lose c.250,000 b/d
  • Recovering demand and the damage low prices will do to supply suggest to us a price rebound into 2016
  • We have cut our forecast for yearly average Brent to $55.48/bbl from $67.94/bbl for 2015 and to $72.94/bbl from $85.18/bbl for 2016

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