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Oil Market Snapshot – January 2016

  • Brent fell to $27.10/bbl intraday on 20th January, before rebounding to above $34/bbl on 28th January after a short squeeze rally and rumours of joint Russian/Saudi production cuts
  • We forecast an average price of $36.50/bbl for Brent in January, with averages of $39.18/bbl and $47.87/bbl for 2016 and 2017, respectively
  • We lower our global demand growth forecast to 1.39 million b/d (-110,000 b/d on previous forecast) on weaker IMF global growth expectations
  • Supply side economic reforms in China will likely apply further pressure on demand
  • North Dakota continues to beat EIA estimates, posting a second consecutive month of production growth, though we see LTO fading this year as operators announce large capex cuts
  • Project delays and cancellations continue in non-OPEC offshore, with the possibility of production declines in 2016
  • We forecast global supply growth of 660,000 b/d in 2016, compared to 2.49 million b/d in 2015, bringing the market closer to balance

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