Outages to balance oil
market, support prices: Reuters poll
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[June 30, 2016]
By Nithin ThomasPrasad
(Reuters) - A string of unforeseen events have reduced oil supply,
helping to rebalance the world oil market and push price forecasts
higher over the last month, a Reuters poll showed on Thursday.
Wildfires in Canada, attacks on pipelines by rebels in Nigeria and
economic crisis in Venezuela have helped cut global oil production by
more than 2 million barrels per day (bpd) over the last few weeks.
A survey of 27 economists and analysts forecast Brent crude <LCOc1> will
average $45.20 per barrel in 2016, up $1.60 from last month's poll.
This is the fourth straight upward revision in forecasts for the North
Sea crude benchmark, which has averaged $41.13 per barrel so far this
"We see Nigeria as a national political situation which is helping the
market rebalance even faster than we've predicted before," said Raymond
James analyst Luana Siegfried.
"Even if further attacks can be prevented this summer, Nigeria's
production has still averaged a 60,000 bpd annual decline over the past
five years, and the fall-off could accelerate with limited drilling
activity," Siegfried said.
Economic crisis is expected to worsen in Venezuela, hitting its oil
production, with refineries and ports suffering due to shortages and
"Venezuela is a progressively growing risk for the oil market as
domestic unrest may translate into large-scale production outages,
removing substantial volumes from the oil market," said Giorgos Beleris,
analyst at Thomson Reuters' Oil Research and Forecasts.
Oil markets have been heavily oversupplied for the last two years with
inventories at record highs, but the global glut has begun to ease and
demand is widely expected to exceed supply during the second half of
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analysts remain cautious. Surprisingly robust U.S. shale output, rising Iranian
oil production and economic turbulence could all disrupt any supply-demand
economists see long-term impact on oil from Britain's vote to leave the European
Oil prices tumbled by around 5 percent on Friday but have since recovered from
the initial shock, aided by a potential oil workers strike in Norway.
Brent futures are expected to average $58.20 per barrel in 2017, rising to
$65.20 in 2018, the Reuters poll showed.
The survey forecast U.S. WTI crude futures <CLc1> would average $43.90 a barrel
in 2016, up $1.90 from last month's poll. U.S. crude oil has averaged $39.70
this year so far.
Raymond James had the highest 2016 Brent forecast at $53.20 per barrel, while
Credit Suisse had the lowest at $37.80.
(Additional reporting by Arpan Daniel Varghese and Vijaykumar Vedala; editing by
Christopher Johnson and Jason Neely)
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