BENGALURU: Oil prices are unlikely to rise much beyond this month’s two-year highs this year, as concern among analysts persists that growing US shale output will hamper the rebalancing between global crude supply and demand, a Reuters poll showed.
Brent crude is expected to average $52.60 (SR197.25) a barrel in 2017, a touch higher than last month’s forecast of $52.53. For 2018, the North Sea crude was seen averaging $54.40 a barrel versus the previous month’s forecast of $54.48.
The monthly poll of 36 analysts and economists projected Brent to average over $60 a barrel by 2020.
This week, Brent hit its highest since July 2015, driven by demand for refined products and views of a quickly balancing oil market following production cuts led by the Organization of the Petroleum Exporting Countries.
OPEC and 11 rival producers, including Russia, have committed to output cuts of 1.8 million barrels per day (bpd) until March 2018 to help global supply align with demand.
Meanwhile, US shale production is set to rise for the 10th month in a row in October to a record 6.1 million bpd.
“We expect higher output from shale oil, Libya and Nigeria will remain the main threat to OPEC efforts to limit global supply,” said Daniela Corsini, commodity market economist at Intesa Sanpaolo in Milan.
“Given its sensitivity to (US futures) prices, shale oil will represent the most effective tool of the rebalancing process and will contribute to keep crude prices in a relatively narrow range,” Corsini added.
Brent, which has averaged $52.48 so far in 2017, is on track for a more than 20 percent gain in the third quarter of this year, its largest rise in the July-September period since 2004.
“With high adherence by OPEC members to the output cut decision in recent months, the market is seen tightening ... With the rise in prices, we expect the US to continue pumping higher output, thus impacting market rebalancing,” said Rahul Prithiani, director at CRISIL Research.
The premium of Brent to US West Texas Intermediate (WTI) crude has grown to its widest since August 2015, at around $7 a barrel.
Analysts see this spread narrowing to trade steadily around $2.72 a barrel for 2017 and $2.79 in 2018.
WTI futures are forecast to average $49.88 a barrel in 2017 and $51.61 in 2018, versus last month’s forecasts of $50.01 and $51.92 respectively for the same period.
The discount of WTI to Brent mostly stemmed from the impact of Hurricane Harvey, which temporarily knocked out nearly 25 percent of US refining capacity on the Gulf Coast last month, denting crude demand.
“The impact of major hurricanes like Harvey and Irma will be short term and will dissipate as refineries in the US resume full operations over the coming weeks,” said Abhishek Kumar, a senior analyst at Interfax Energy in London.
OCBC had the highest 2017 Brent forecast at $57 per barrel, while Julius Baer had the lowest at $48.80.
US shale hinders hopes for oil market rebalancing
US shale hinders hopes for oil market rebalancing
QatarEnergy announces force majeure following Iran attacks: statement
DOHA: Qatar’s state-run energy firm on Wednesday declared force majeure following attacks on two of its main facilities that halted liquefied natural gas production and as Iran pressed missile and drone attacks across the Gulf.
“Further to the announcement by QatarEnergy to stop production of liquefied natural gas and associated products, QatarEnergy has declared Force Majeure to its affected buyers,” the company said in a statement.
QatarEnergy invoked the clause, which shields it from penalties and potential breach of contract claims from clients, after stopping LNG production on Monday.
Iranian drones attacked two of the company’s main production hubs in Ras Laffan Industrial City, 80 km north of Doha and in Mesaieed 40 km south of the Qatari capital, Doha’s ministry of defense said at the time.
The Gulf state is one of the world’s top liquefied natural gas producers, alongside the US, Australia and Russia.
On Tuesday, QatarEnergy said it would halt some downstream production of some products including urea, polymers, methanol, aluminum and others.
Qatar shares the world’s largest natural gas reservoir with Iran.
QatarEnergy estimates the Gulf state’s portion of the reservoir, the North Field, holds about 10 percent of the world’s known natural gas reserves.
In recent years, Qatar has inked a series of long-term LNG deals with France’s Total, Britain’s Shell, India’s Petronet, China’s Sinopec and Italy’s Eni, among others.
