Brent price forecast to US$66 per bbl for 2019: Jadwa Investment

33685307724 42a85249b2 zJadwa Investment, a capital market company, has released its latest report on Quarterly Oil Market update

The important observations from the report are as follows:

Lower OPEC output and hopes of some progress over the US-China trade dispute have helped Brent prices recover to around US$60 per bbl, although the outlook on oil demand remains subdued. According to the latest OPEC forecasts, global oil demand will grow by 1.29mn bpd in 2019, the lowest rate of growth since 2013.

The report revealed that there have been encouraging signs in trade talks between the US and China over tariffs recently, and any agreement between the two countries could provide upside to oil demand, and indeed oil prices, going forward.

Meanwhile, OPEC data shows that while Q4 2018 oil output was flat quarter-on-quarter, there was a sizable decline in output in December, by 750 thousand bpd month-on-month. This decline came prior to the commencement of an OPEC+ agreement to reduce 1.2mn bpd in output during the first half of this year.

During the remainder of Q1 2019, the capital company expects a gradual lift in prices as OPEC data confirm compliance to the agreement and OECD oil stocks begin to fall to lower than the five-year average. Later in the year, it expects markets to remain fairly balanced due to a combination of waivers expiring for importers of Iranian oil, and because of a roll-over of the OPEC+ agreement into H2 2019.

Taking all the above into consideration, the company has revised the Brent price forecast to US$66 per bbl for 2019, compared to US$75 per bbl previously.

In addition to the above observations, the report included a discussion on US-China trade tensions and Russian and US crude oil production forecasts.

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