Morgan Stanley predicted oil at $30 until spring 2017


Contrary to earlier forecasts, world oil prices in the second half of 2016 will not grow and may even fall further, according to the forecast of analysts of investment Bank Morgan Stanley. If that was previously provided for the forecast increase in the average cost of a barrel of Brent in the October—December 2016 to $59, now experts are expecting no growth, and the fall of, reports Business Insider.

In the baseline scenario Morgan Stanley, the average cost of a barrel of Brent will remain at $30-31 until autumn 2016, and the last quarter falls to $29 and will once again rise above $30 in the spring of 2017. At worst for the case of oil producers in October—December 2016 the average price of oil could fall to $20 per barrel.

Earlier Morgan Stanley had expected in the second quarter of 2016 the average cost of a barrel of Brent will rise to $45, and the third to $48.

The main reason that oil prices will remain low for longer than expected, Morgan Stanley called the persistence in the oil market imbalance, which offer considerably exceeds demand. In the report of analysts of the Bank noted that in the baseline scenario to balance the market will fail before mid-2017 before this period the oil price increase will not go.

Analysts of the British Bank Standard Chartered, previously predicted the fall in oil prices to $10 per barrel and below, at the end of January 2016, made an optimistic forecast that by the end of the year the price of a barrel of Brent could reach $70-75 per barrel.

However, according to Longson, it can happen not before mid-2017, and then only in conditions of a bull market. According to the baseline scenario, the price of a barrel of Brent could reach $75 in the third quarter of 2018.

“Weaker than previously expected demand, higher than expected production and accelerated growth of reserves will delay the balancing market and will delay the return of price growth,” explained Morgan Stanley analyst Adam long son.

He also noted that oversaturated the market will differ due to the increased volatility, resulting in an exchange price of oil will change dramatically under the influence of jumps of exchange rates and a headline in the media.

At the end of January 2016 the world Bank (WB) also lowered its forecast for average oil prices in 2016, dropping it from $51 to $37 per barrel. However, the world Bank experts while you wait, since the middle of the year the price per barrel will begin to grow following the recovery of the global economy and the withdrawal from the market of the least efficient producers.

According to the International energy Agency (IEA), average global demand for oil will increase in 2016 by about 1.2 million barrels. Compared with the previous version of the forecast growth in daily average demand was reduced by the IEA on 100 thousand Barr., due to the mild winter and weak economy.

In turn, the representative of Kuwait in OPEC Nawal al-Fuzaia called a brake of price growth that developed countries have already accumulated large oil reserves. As a result, according to her, in the first half of 2016, the average price of a barrel of oil will likely be below $30.

“Inventory is higher than the average for the five years which complicates the situation, especially in anticipation of the suspension of the refinery in the second quarter. So the first half of the year is likely to be difficult,” said al-Fuzaia.

The head of BP Bob Dudley has previously stated that the oil price could fall to $10 per barrel, but in the second half of the year oil prices will rise to $50.

During today’s trading on the stock exchange ICE cost of a barrel of Brent fluctuating between $34 and $36.