Swiss bank UBS has forecast oil prices to stabilise at $67-72 per barrel by the end of 2015.
According to UBS, supply-demand balance is expected to improve due to “greater clarity on geopolitical issues”, including the Iranian nuclear deal.
The firm also added that demand for crude was likely to remain strong as the “cold winter weather tapers off and OPEC countries strategically stockpile their barrels”.
Demand could increase from 0.8mn barrels per day (bpd) in 2014 to 1.4mn in 2015 and drop slightly to 1.3mn bpd in 2016, it said.
“While OPEC will likely continue its output-maximising strategy, a sharply lower rig count and significant reductions in drilling capex in the United States will slow production to rates that will sharply impact the oil market next year.
“The outlook for oil prices during the second half of the year is quite positive, even when we consider the downturn that Brent prices have taken these past few weeks.
As non-OPEC supply growth decelerates and demand for oil increases, oil prices are still on track to trade at around $70 per barrel,” said UBS Wealth Management global chief investment officer Mark Haefele.
“The oil market is intrinsically sensitive to economic and geopolitical developments around the world. The uncertainty surrounding ‘Grexit’ and the sharp slide in Chinese stocks dampened the outlook and eroded fundamentals in a market that was already suffering due to oversupply.
“Now that some of these situations have moved away from deep uncertainty, our analysis shows that energy equities offer value for investors,” he added.
