16 Feb 2015
Oil collapse almost over - JPMorgan
FXStreet (Bali) - According to JPMorgan, while the Oil's collapse is almost over, they still expect that crude prices will fall as we approach the March/April period to fresh lows, the Research Team notes.
Key Quotes
"Oil market balances for 1H2015 point to a significant build in global oil inventories. Thereafter, market fundamentals improve in 2H2015 spurring a small recovery in price."
"We expect that crude prices will fall as we approach the March/April period to fresh lows, and potentially the low for this cycle as seasonal refinery maintenance erodes crude buying and global oil production remains robust."
"We forecast Brent futures to average $49/bbl in 2015, with a low point in March at around $38/bbl. We expectBrent futures to recover from their 1H2015 lows, to reach an average $58/bbl in 4Q2015. We expect2016 Brent futures to average $57/bbl."
"WTI forecasts for 2015 and 2016 are $46/bbl and $52/bbl respectively, with pressure in the Brent market expected to compress the Brent-WTI spread to $2/bbl in 1H2015."
"In the short term, there is evidence of greater acceleration in capex reductions by companies than we have assumed in the recent oil market monthly."
"However, it is premature to translate the rapid decline in rig count across various US states and shale plays as an immediate drop in production. Only if there is no offsetting increase in average well productivity – which seems unrealistic –does the drop in rigs imply falling production from mid 2Q2015"
Key Quotes
"Oil market balances for 1H2015 point to a significant build in global oil inventories. Thereafter, market fundamentals improve in 2H2015 spurring a small recovery in price."
"We expect that crude prices will fall as we approach the March/April period to fresh lows, and potentially the low for this cycle as seasonal refinery maintenance erodes crude buying and global oil production remains robust."
"We forecast Brent futures to average $49/bbl in 2015, with a low point in March at around $38/bbl. We expectBrent futures to recover from their 1H2015 lows, to reach an average $58/bbl in 4Q2015. We expect2016 Brent futures to average $57/bbl."
"WTI forecasts for 2015 and 2016 are $46/bbl and $52/bbl respectively, with pressure in the Brent market expected to compress the Brent-WTI spread to $2/bbl in 1H2015."
"In the short term, there is evidence of greater acceleration in capex reductions by companies than we have assumed in the recent oil market monthly."
"However, it is premature to translate the rapid decline in rig count across various US states and shale plays as an immediate drop in production. Only if there is no offsetting increase in average well productivity – which seems unrealistic –does the drop in rigs imply falling production from mid 2Q2015"