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According to analysts from Danske Bank maintain their forecast of the price on Brent at USD72/bbl in Q4 this year and to average USD70/bbl in 2018 and USD73/bbl in 2019. They await clarifications of the ramifications of the Iran nuclear deal.

Key Quotes:

“The outlook for the world oil market balance has started to look tighter. We stress that the demand outlook is still looking positive supported by steady global economic growth and a weaker USD compared to last year. On the supply side, we think estimates for production
increases in US are too optimistic. OPEC is set to maintain production cuts the rest of the year and will likely maintain some sort of quota system after 2018 which leaves some room for production increases.”

“The Brent crude oil market forward curve remains in a steep backwardation as the front-end of the curve remains supported by a geopolitical risk premium and the market pricing more supply over the medium-term is keeping the back-end in check.”

“On 22 June, OPEC is set to meet to review production cuts. The meeting looks set to take place on the back of an oil price above USD70/bbl, which may encourage OPEC to allow more oil to come to the market after 2018. This creates a downside risk to prices if OPEC sets the ceiling too high.”

“We maintain our forecast of the price on Brent at USD72/bbl in Q4 this year and to average USD70/bbl in 2018 and USD73/bbl in 2019. We await further clarification of the ramifications of the Iran nuclear deal before taking that into account in our forecasts.”