The experts project Brent crude oil to average 50 dollars per barrel the first quarter and 55 dollars per barrel in the second quarter as the market is likely to run a 1.5 to 2.0 million barrel per day surplus during this period as OPEC holds its production inflexibly fixed at 30 million barrels per day or higher versus a need for OPEC’s oil of about 28.6 million barrels per day.
Because the global oil market appears fairly balanced in the second half of 2015, there is little need for OPEC to cut production at its Jun 5 meeting. Instead, it is likely to postpone such a decision until it meets again in Nov/Dec this year.
“We forecast Libya and Iran will remain side-lined in 2015 awaiting a propitious time to return to the market. OPEC has learnt that a Brent crude price of $100 per barrel is not viable in an environment of muted global GDP growth and thus oil demand growth combined with booming US shale oil production growth,” says Bjarne Schieldrop , SEB’s Chief Commodity Analyst.
They say the market on the other hand has been reminded that the true character of the market is highly inflexible supply and demand which leads to extreme price gyrations the moment OPEC decides not to flex its production.