Oil Cover

Oil Market Snapshot – March 2015

  • Brent’s stabilisation last month at an average of $58.10/bbl proved short-lived, averaging $53.89/bbl before Saudi Arabia bombed Yemen causing a rebound
  • Our demand growth forecast for 2015 remains broadly unchanged at 1 million b/d; albeit 2016 has been trimmed to 1.24 million b/d (-0.13 million b/d) due to EIA’s downward GDP revisions
  • We expect an oil demand rebound in OECD, while non-OECD demand growth will slow mainly due to Western sanctions on Russia and economic slowdown in China
  • We see GDP growth in India and Indonesia partially offsetting China
  • OPEC production remains high, with Saudi Arabia’s at a record high, but we believe non-OPEC production growth is likely curbed at c. 150,000 b/d or less in 2015
  • IEA’s non-OPEC production forecast has not yet considered fall in US rig count and China’s production cuts (-600,000 b/d) – upside risk to prices
  • Progress in the P5+1 nuclear negotiations with Iran may provide downward pressure on prices and support OPEC’s drive for market share
  • Despite cost pressures, Big Oil remains invested in deepwater, cost optimisation and tax cuts could raise attractiveness of mature areas such as the North Sea
  • The US Gulf of Mexico remains robust, seeing strong interest for deep- and ultra-deepwater blocks in the recent bidding round
  • US LTO sees a wave of consolidations begin with the Bakken’s biggest producer Whiting up for sale, Quicksilver bankrupt, and Statoil looking to expand

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