Oil to hold steady into 2019

Washington : Oil prices are likely to hold fairly steady this year and next as increased output from OPEC and the USmeets growing demand led by Asia and helps to offset supply disruptions from Iran and elsewhere, a Reuters poll showed yesterday. A survey of 44 economists and analysts forecast Brent crude to average $72.87 a barrel in 2018, 29 cents higher than the $72.58 projected in the previous month’s poll and above the $71.68 average so far this year. US crude futures were seen averaging $67.32 a barrel in 2018, compared with $66.79 forecast last month and an average of $66.16 until now. This is the 10th consecutive month in which analysts have raised their oil price forecasts.

“We expect prices will largely remain range-bound in the second half of 2018 and 2019. On the one hand, robust US shale production and market concerns over the brewing US-China trade war will help keep a lid on prices,” said Cailin Birch, an analyst at the Economist Intelligence Unit. “On the other hand, the recent decline in stocks will make prices more sensitive to any geopolitical risk, which will keep prices from falling significantly below current levels.”

The Organisation of the Petroleum Exporting Countries (OPEC) and non-OPEC countries agreed to raise supply in a meeting last month to meet rising global demand, but the group did not specify a clear target for the output increase. “The disruption to Iranian barrels will weigh on oil markets in the second half of 2018 and H1 2019 as there are few spare barrels in the market that can offset a big disruption to Iranian supplies,” said Emirates NBD commodities analyst Edward Bell. Analysts expect a drop of about 500,000-1 million barrels per day (bpd) in Iranian output due to the sanctions.