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Investment Banks disagree on oil price recovery in 2017

By on January 4, 2017

Global investment banks have differed on their forecasts on the recovery of crude oil prices in 2017, a recent survey on the projections of 12 banks has shown.

Crude prices dropped from a peak of $115 per barrel in June 2014 to a 13-year low of $27 per barrel in February in 2016.

The global benchmark Brent crude also traded at $57.89 per barrel on December 12, 2016 before dropping to its current average of $55.

But the result of the survey by wall Street Journal indicated that the 12 banks – Credit Suisse, BNP Paribas, ING, Commerzbank, Deutsche Bank, Societe Generale, Citigroup, JP Morgan, Barclays, RBC, Bank of America Merrill Lynch and Standard Chartered – all predicted a US crude price of around $45 per barrel and above in 2017.

However, three banks forecast that 2017 will end with crude oil selling at below $50 per barrel, while nine of the banks predicted that oil will close above $50 per barrel in 2017, with Standard Chartered making the highest forecast of about $68 per barrel for the fourth quarter of 2017.

In the first quarter of 2017, half of the banks forecast prices below $50 per barrel, while the remaining six saw oil selling above $50 per barrel, according to the December 2016 survey conducted by the Wall Street Journal Market Data Group.

Three banks – Deutsche Bank, Barclays and Bank of America Merrill Lynch – saw oil averaging $55 in the first quarter.

The survey showed that in the second quarter, five of the banks predicted below $50 per barrel for the price of oil, with ING and JP Morgan making the lowest forecasts of $45 per barrel.
Seven of the banks predicted oil prices above $50 per barrel in the second quarter, with Standard Chartered making the highest forecast of around $63, followed by Barclays’ average of $60 per barrel.

JP Morgan and ING saw US crude price settling around $45 in the second quarter 2017, according to the survey.

In the third quarter, only three banks – ING, Commerzbank and JP Morgan – predicted below $50 per barrel for the price of oil, with forecasts hovering around $45, $48 and $45, respectively.
The other nine banks predicted an oil price of above $50 per barrel in the third quarter, with Standard Chartered giving the highest forecast of close to $65 per barrel, followed by Deutsche Bank and Bank of America, both of which predicted an average of $64.

Four banks – RBC, Barclays, Societe Generale and BNP Paribas – saw the price of US crude settling around $55 in the third quarter.

In the fourth quarter of 2017, ING, Commerzbank and JP Morgan still believed that oil price would remain around $45 per barrel.

However, Standard Chartered predicted the highest recovery of oil at about $68 per barrel in the fourth quarter of 2017, followed by Citigroup and Bank of America, which predicted around $62 and $61, respectively.

Credit Suisse and Societe Generale both saw oil prices around $60 per barrel in the fourth quarter, while RBC and BNP Paribas forecast $58 and $55 per barrel for oil, respectively.

 

[ThisDay]