According to a Reuters monthly survey, crude oil prices are likely to bottom out in the first half of 2015, until a possible slowdown in US shale production counters oversupply.
Opec’s recent decision not to cut monthly output from 30mn barrels per month means the onus to cut production currently lies with non-OPEC countries.
“Oil prices will be lower, making shale oil production less attractive for investments, which are necessary to keep shale oil production growing,” Commerzbank’s Carsten Fritsch said, in The Peninsula.
The survey of 30 economists and analysts projected Brent to average $74 a barrel next year and $80.30 in 2016. The forecast for 2015 is $8.50 below the average projection in the previous Reuters poll.
The November poll number was down $11.20 from October, marking the biggest downgrade in average forecasts since the 2008 global downturn. Brent has averaged $100.57 so far this year.
As non-Opec production responds to lower prices, oil is seen to be recovering in the second half, while demand picks up in the course of the year, the poll showed.
“In terms of the floor price, we think $60 per barrel will be the level at which fast-rising US shale oil producers will feel the pinch,” ANZ analyst Natalie Rampono said.
“Supply cuts above this level will be limited to other smaller, high-cost US and Canadian unconventional oil producers. Although we think it will take six to 12 months for these supply cuts to become apparent,” she added.
Some analysts, however, were sceptical whether Opec’s stand would serve as a deterrent to US shale oil producers.
“The lag in oil production response from existing wells from the US suggests that only the marginal oil projects will be discouraged at this stage,” Vyanne Lai of National Australia Bank said.
