This week, the energy information Administration (EIA) at the U.S. Department of energy released its weekly statistics on commercial oil reserves in the States in the week ended April 1. For the first time since the beginning of the year the indicator fell by 5 million barrels. or 1% to 529,9 million barrels. Based on this data, analysts at Bank of America suggest that the restoration of balance in the oil market, which will take in total about one and a half years.
Analysts justify their forecast the same trends, which in mid-March, OPEC wrote in its monthly market review. On the one hand, after several years of volatility in global oil demand in 2016 will grow steadily. The average increase in consumption will be the same in all blocks and will average 1.25 million barrels. per day or 1.5%. The extraction will be reduced. For example, oil production in countries outside OPEC for the year 2016 will be reduced by an average value of 700 thousand Barr.
Accordingly, the reduction of production and stable consumption growth will sooner or later lead to a balance of supply and demand and rise in oil prices. The decrease in commercial stocks, according to Bank Of America, and is a sign of the future market equilibrium. According to analysts, on its establishment will take about six quarters — that is, by the fall of 2017.
Gradual restoration of market balance will entail and the increase in oil prices. By this summer, expects Bank of America, the price of a barrel of Brent could reach $47 (last month, the index is around $40). In March, the Bank projected: later oil prices will continue to rise, the average cost of a barrel of American WTI in 2017 will be $59. On Friday at 18:20 Moscow time a barrel of WTI was quoted at $39,7.
But at this stage again there is a risk of overproduction of oil and reverse the rollback of oil prices, on Friday warned the experts of the Danish Saxo Bank. Their growth to $55-60 per barrel. will lead to the fact that many wells for the extraction of shale oil in the US will cease to be unprofitable, and American manufacturers will quickly start to increase the pace of production. While Saxo Bank analyst OLE Hansen agrees with Bank of America that in 2017 the balance of supply and demand in the market can be restored.
Since the “shale revolution” in the USA became the main reason of crisis of overproduction, the Americans will help to restore market balance, says Hansen: it is because of the ability to quickly collapse and quickly expand production. “There is no doubt, because they are more likely to respond to changes in quotes,” — emphasizes the analyst.
From the meeting of representatives of OPEC countries and Russia in Qatar on April 17, Hansen does not expect serious consequences for the market. “The market is easy to fool. Since the first verbal intervention in January, oil has risen by half, he said. — Much has been achieved literally from nothing, and at this stage the participants will be satisfied if they at least will just keep the market confidence that the necessary measures will be taken if necessary”.