Oil: Brent likely to recover to mid-high US$50s by the end of 2017 - NAB
|The research team at NAB sees Brent recovering to mid-high US$50s by the end of 2017, climbing to mid US$60s by the end of the decade.
Key Quotes
“Late last year, OPEC and Russia agreed to limit production to 1.8mb/day. The OPEC-Russia deal initially saw markets jump significantly, from midhigh US$40s to mid US$50s/bbl (Brent). However by March it had become clear that improved prices were helping US shale producers restart production and steal market share from OPEC, sending prices tumbling back into the low US$50s range for Brent.”
“US production looks set to perform, having bottomed out in October last year. Latest EIA data show weekly US crude production exceeding 9.3 million bbl/day, the highest since August 2015. With rig counts heading upwards, it is likely that US production will continue to climb if prices hold steady.”
“OPEC members decided last week to continue the production cuts another nine months. Despite the decision, however, much of the upside from the OPEC extension was already priced in, while a fall in prices following the decision possibly reflects some disappointment in the market that members failed to come to a last minute agreement to deepen the production cuts even further. Combined with the ability of US producers to restart production, major upside for oil prices will probably remain elusive.”
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