Oil Cover

Oil Market Snapshot – May 2015

  • Brent has traded around the $65/bbl level throughout May, up over 40% from its lowest point in January
  • The price recovery has been driven by bullish speculators and geopolitical events – we find the current price level unsustainable and expect a correction
  • Our Brent average forecasts for 2015 is broadly unchanged, while for 2016 we forecast a lower average price
  • On a more positive outlook from the OECD, we see global demand growth of 1.14 million b/d in 2015 (+0.07 million b/d on April forecast) and 1.32 million b/d in 2016 (+0.1 million b/d)
  • However, we also increase our 2015 global production growth forecast to 1.49 million b/d on higher expectations for US LTO and OPEC, leaving the world in surplus this year
  • North Dakota’s March oil output of 1.19 million b/d was in line with our forecast of 1.17 million b/d - we expect peak production of 1.35 million b/d in November
  • Our revised forecast for North Dakota sees 2015 output averaging 1.28 million b/d (+200,000 b/d y-o-y) contingent on the availability of finance
  • OPEC continues to ramp up production for market share, with Eni and Exxon forging ahead in Angola and Iraq plans to raise export. We expect no change in OPEC policy at their June 5th meeting

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