The Economist Intelligence Unit has announced that it maintains its forecast that Brent will average US$40/bbl in 2016. Global demand growth will slow throughout 2016.
According to International Energy Agency figures, supply exceeded demand by 1.54 million bpd on average in 1Q16, which is only mildly down from the 1.74 million bpd of surplus registered in 2015. The Unit expects more modest stock accumulation in the remainder of the year.
The Economist Intelligence Unit expects the oil prices will rise in 2017, when annual global oil consumption will exceed production for the first time since 2013, leading to stock depletion. This will reflect both slightly faster global economic growth, which will underpin oil usage, and the negative impact of several years of low prices on investment (and therefore output). In the light of this, we forecast that Brent will climb to an average of US$56/bbl oil market will remain in deficit in 2018, pushing prices up further.
China's slowdown will also have knock-on effects on other economies and weigh on sentiment globally. On balance, prices are expected to average US$68/bbl that year. Continued output growth from OPEC countries, including Iran, Iraq and, significantly, Libya will lead supply to exceed demand again in 2019-20, especially since a forecast recession in the US in 2019 will restrict consumption growth. In line with these trends, Brent is anticipated to edge down to an average of US$63/bbl in 2019 and US$62/bbl in 2020.
Edited from press release by Angharad Lock
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