Investment banks downgraded the oil prices in 2017

The average cost of a barrel of Brent oil next year will be $56, American WTI will cost $55/bbl, analysts said 13 investment banks polled by The Wall Street Journal. These estimates are about $1 less than a month ago, the newspaper notes.

The surveyed banks believe that oil prices will remain below $50/bbl. By the end of this year, and by the end of next year, will increase to $60/bbl. Last summer, many respondents expected this year prices will exceed $70/bbl.

In late July, the oil market returned to bearish cycle, which means lower prices for the main grades of more than 20% from the last maximum. According to the exchange ICE, hedge funds and other speculative investors have reduced bets on rising Brent prices to the lowest in five months.

After a long period of rising oil prices, which lasted from the beginning of the year, they began to decline. On the assessment of the WSJ, one of the main reasons for the change of trend is the surplus of gasoline on a global scale, as refineries have taken advantage of low oil prices in the last two years actively purchased raw materials. The result, according to Citigroup, the world’s supply of gasoline reached almost a record level of 500 million barrels.

This situation is compounded by the reluctance of oil exporters to reduce its production, notes the WSJ. In Russia, production is maintained at levels close to post-Soviet high, achieved earlier this year. Also restored production in Canada and Nigeria, the supply of which in the spring fell by 3 million barrels./day.

According to analysts of the Bank, J. P. Morgan, who leads WSJ, time period to achieve an oil market balance in recent weeks has shifted as a result of weakening demand, a quick resumption of supplies from Nigeria and increased production in Saudi Arabia, Russia and other exporters.

As of 15:10 Moscow time, a barrel of Brent cost $42,95, which is 0.35% below the closing price; WTI is trading at $40,84/bbl. (+0,02%).