Oil price forecasts falling as 2016 outlook darkens

Oil price forecasts are falling once again, as analysts are increasingly expecting a bleaker 2016 for the energy industry.

On Monday, both debt evaluation group Fitch Ratings and financial services firm Raymond James said they had lowered their expected oil prices through 2016. Both groups join a growing number of analysts who are calling oil's problems too tough to solve this year or next.

Fitch said it's now expecting U.S. oil to average $50 per barrel in 2016 and $60 per barrel in 2017. The group also cut its Brent crude forecast, the global benchmark, to $55 per barrel in 2016 and $65 per barrel in 2017.

Raymond James said it's pushing its 2015 U.S. oil forecast to an average of $50 per barrel through all of 2015 and $55 per barrel in 2016. That's slightly higher than Fitch's 2016 outlook, but $10 per barrel lower than the previous Raymond James estimate.

"While the gap between oil supply and demand appears to have peaked at 3 million barrels per day in Q215, the market is unlikely to balance until 2H16 at the earliest when it will still have to digest elevated oil stocks," Fitch Ratings said in a statement Monday. "We have therefore effectively pushed back the slow recovery we had assumed by one year and now include a modest price recovery only in 2017."

Raymond James offered a similar assessment in a weekly note to clients: "Given the extent to which the global oil market is likely to remain oversupplied for longer, we see minimal room for oil prices to improve from current levels until mid to late 2016."

Raymond James said its cut comes after Saudi Arabia, Iran and Iraq have continued to pump ever more oil despite low prices. The firm isn't expecting a substantial oil recovery until 2017 and 2018, barring a large supply disruption.

IEA: Oil Price To Rise Only Gradually To $80 By 2020
http://www.rigzone.com/news/oil_gas/a/141533/IEA_Oil_Price_To_Rise_Only_Gradually_To_80_By_2020/?all=HG2

Oil is unlikely to return to $80 a barrel before the end of 2020 despite unprecedented declines in investment, as yearly demand growth struggles to top 1 million barrels per day (bpd), the International Energy Agency said on Tuesday.

In its World Energy Outlook, the IEA said it anticipates demand growth under its central scenario will rise annually by some 900,000 bpd to 2020, gradually reaching demand of 103.5 million bpd by 2040.

The drop in crude to around $50 a barrel this year has triggered steep cutbacks in production of U.S. shale oil, one of the major contributors to the oversupply that has stripped 50 percent off the price in the last 12 months.

“Our expectation is to see prices gradually rising to $80 around 2020,” Fatih Birol, executive director of the IEA, told Reuters ahead of the release of the report.

“We estimate this year investments in oil will decline more than 20 percent. But, perhaps even more importantly, this decline will continue next year as well.”

“In the last 25 years, we have never seen two consecutive years where the investments are declining and this may well have implications for the oil market in the years to come.”

excerpted for Reuters...

And a different perspective on the same report, just shows how the media often reports want they want to suit their desires:

Oil Prices Fluctuate as IEA Warns OPEC Over Strategy
http://www.wsj.com/articles/oil-prices-fluctuate-as-iea-warns-opec-over-strategy-1447152940
Price of Brent crude could stay at around $50 a barrel through to the end of the decade, the IEA warns

In its World Energy Outlook, the International Energy Agency said “a lasting switch in OPEC production strategy in favor of securing a higher share of the oil market mix” could keep the price of Brent crude at around $50 a barrel through the end of the decade. Under a more bullish scenario, the IEA said oil could rebound to around $80 a barrel by 2020 as the oversupplied market begins to balance.

Is that why the economy has been booming for the past year of lower gasoline and diesel prices?

Or has the large loss of jobs and business been a greater impact to the US economy?

We are the third largest oil producers in the world, but but much farther down the list in reserves. It is because we have a lot of industry associated with the production and the many support industries.

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