Analysts cut yet again—for a sixth consecutive month—their oil price forecasts for 2017 and 2018, as the slower-than-expected rate of oil market rebalancing puts an increasing amount of pressure on OPEC’s resolve to stick with the cuts, according to 33 economists and analysts surveyed in the July Reuters poll.
According to the survey, Brent crude prices are seen averaging US$52.45 per barrel this year, lower than the US$53.96 forecast in the June poll.
For WTI, the experts now expect the price to average US$50.08 in 2017, compared to US$51.92 in the June poll.
Analysts and economists also cut their 2018 price projections, with Brent seen averaging US$54.51 next year, down from US$57.37 in the previous poll. WTI price is expected to average US$51.88 next year, a significant downward revision from the US$55.20 predicted in June.
Earlier this month, the International Energy Agency (IEA) said that the rebalancing was taking too long, and that compliance among OPEC members slipped in June to its lowest level—78 percent—since the start of the deal, as not only exempt Libya and Nigeria pumped more, but also Saudi Arabia. Although OPEC’s biggest producer stayed within the limits, according to OPEC’s secondary sources, it did not overcomply with its share of the cuts as much as it had done in previous months. Related: Europe’s Biggest Oil Refinery Shut Down After Fire
Now the analysts in the July Reuters poll have cut their oil price forecasts every month since February, this month pointing to expected fading resolve of some OPEC members to continue to cut production.
“The longer prices remain low, the greater the risk is that some OPEC countries will no longer comply with the production cuts as strictly as they have been doing so far,” Commerzbank analyst Carsten Fritsch told Reuters.
Although Ecuador’s pulling out of the OPEC deal is likely to have a limited effect on actual cuts, the move could further dampen sentiment and other members’ resolve to continue cutting the way they had done before, according to analysts.
By Tsvetana Paraskova for Oilprice.com
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