The summary of market info as of 10 Feb 2015 is as follows:
- International Energy Agency (IEA) reported on cutting their long-term supply forecasts, and also their demand estimates. They warned that lower oil prices will not necessarily boost demand growth as strongly as it might be expected. IEA predicted that global oil prices will recover only partially over the next five years
- It seems market rebalancing occurring “relatively swiftly”, with increases in inventories halting mid- year and the market tightening. It means a new era of lower equilibrium price would be experienced soon.
- EIA forecasts that Brent prices will average $58/bbl in 2015 and $75/bbl in 2016, while WTI prices expected to be $55.02/bbl in 2015 and $71.0/bbl in 2016. This price outlook is unchanged from last month’s forecast.
- Reuters crude oil price poll of 33 industry analysts as of 30 Jan’15 estimates Brent at average $58.3 in 2015 and $69.8/bbl in 2016, and WTI at average $54.2 in 2015 and $64.9/bbl in 2016
Using the methodology of Error Correction Mechanism (ECM) developed by Engle-Grager (2003 Economics Nobel Award) , we update the SLC (Sumateran Light Crude/Minas) forecast is as follows:
Based on the graph, we estimate SLC will increase to $51.28/bbl in Feb 2015 and will average $ 56.6/bbl for full year 2015.
Disclaimer: The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Opinions expressed are our current opinions as of the date appearing on this material only and would be updated every month.
