Growth of OPEC and non-OPEC oil supply is expected to decline
within the next 18 months and the average Brent prices for 2014 and 2015 are
likely to range from $106-$109 and$103-$108, respectively.
A recent report suggested that Brent prices may increase on the back of
tighter supplies. Most research groups were expecting oil prices to
decline as a result of strong dollar, slow GDP growth and increasing supplies.
However, Brent crude oil front-month contract rolling prices have
average $109/bbl and a number of reasons have been responsible for these high
rates. Geopolitical crises and supply issues coupled with depreciation of the
dollar by 2 per cent and the rising US inflation have pushed up oil prices.
Non-Opec supply accounted for nearly 4 quarters of the 2 million bpd
supply growth on a year-on-year basis, but is currently growing by only a
million bpd year-on-year, which will lead to limited supply. Majority of the
growth is expected to come from North America and nations like China, Brazil,
Russia and Columbia will enjoy only limited gains. Thus, a number of key
producers will likely face declines.
WTI is expected to fall below $100/bbl in 2014, while US benchmarks
will see downside risks. The WTI crude oil forecast for 2014 and 2015has now
been revised to $98/bbl and $96/bbl, respectively.
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