Oil Cover

Oil Market Snapshot – October 2014

  • Brent fell to $82.60/bbl on 16th October month-to-date as OPEC members refrained from production cuts, suggesting their focus remains on market share
  • ICE Brent Futures contango steepened, as front month contract prices (maturing 25th October) fell by over $10/bbl relative to September; the lowest level in almost four years
  • Higher projected US Dollar appreciation vs key currencies due to liquidity and borrowing constraints in the Eurozone exacerbate already lacklustre GDP growth rates
  • The IMF has again downgraded its global economic outlook; any prolonged period of low prices would then translate swiftly into delayed production of US tight oil and eventually other upstream projects, thereby reducing the oil supply surplus
  • Taking account of weaker fundamentals and bearish futures trading, we have slashed again our oil price forecast for 2014 and for 2015
  • A potential near-term OPEC decision on production cuts could lead to oil prices above our forecast for 2015; however cuts might not translate into actual export reductions

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