October 1, 2014 / 2:17 PM / 3 years ago

POLL-Oil price forecasts cut, to stay subdued in 2015

* Forecasts slashed from last month as oil slumps

* Prices not seen recovering significantly next year

* Brent seen averaging $103.30, WTI $96.10 in 2015

* For a table of crude price forecasts, see

By Arpan Varghese and Ratul Ray Chaudhuri

Oct 1 (Reuters) - Energy analysts have made the largest downward revision to their oil price forecasts in almost two years, a monthly Reuters poll showed on Wednesday, with the marked weakness in the price of Brent seen persisting into 2015.

The survey results pose a challenge to members of the Organization of the Petroleum Exporting Countries (OPEC), who have largely argued prices will recover from two-year lows hit below $95 a barrel this week on stronger demand in the fourth quarter.

The poll of 30 analysts said international benchmark Brent crude oil would average $103.30 a barrel in 2015, down from $105.30 in the August survey. The $2 average price cut is the largest month-on-month decrease according to survey data going back to the start of 2013.

Brent has averaged near $110 a barrel since 2011 but has fallen sharply since June as U.S. shale oil supplies outstripped expectations and Iraqi and Libyan production has risen despite violence and political unrest in the two OPEC members.

“Increasing supply from Iran, Libya and Iraq, as well as the United States should ensure that supplies are more than ample,” said analyst Thomas Pugh of Capital Economics, who had the lowest Brent outlook at $90 a barrel for 2015.

“Meanwhile, weak economic growth in the euro-zone and slowing growth in China should keep demand growth subdued.”

On Tuesday Reuters monthly survey of OPEC production showed higher supplies from the group last month, despite calls from some members for a cut in output when it next meets in November.

“OPEC needs to cut production to rebalance oil markets, yet we see no evidence or sense of urgency for a faster reduction in production,” Morgan Stanley said in a note on Wednesday.

“Sustained lower prices (e.g., sub-$95 a barrel) may be required to spur faster action.”

Saudi Arabia, the group’s largest producer and the most likely to adjust production unilaterally, increased supplies slightly last month, the Reuters survey showed.

U.S. light, sweet crude, also known as West Texas Intermediate or WTI, would average $96.10 next year, below the $98.50 outlook in the previous month’s poll. WTI has averaged $99.57 so far this year.

While analyst Torbjørn Kjus of DNB Markets saw a large risk of WTI prices falling next year to levels that negatively impact U.S. shale production, most analysts expected the North American benchmark to remain high enough to spur the tight oil boom.

Rahul Prithiani, director at CRISIL Research, said the shale boom would not be impacted in 2015 since WTI prices would likely remain well above the $70-75 per barrel range, at which the majority of production is feasible.


With a $110 per barrel average forecast for Brent in 2015 -- one of the highest in the survey -- Commerzbank’s commodity analyst Carsten Fritsch said market participants were underestimating near-term supply risks.

Libyan and Iraqi oil supply will remain vulnerable due to ongoing violence and political strife in the two OPEC members, Fritsch said.

Raiffeisen Bank International had the highest 2015 Brent forecast at $111 a barrel.

Brent’s premium CL-LCO1=R to WTI should narrow to $7.20 per barrel in 2014 and remain at the same level in 2015 from $10.58 last year, the poll showed.

The so-called Brent-WTI spread narrowed to its lowest in more than a year on Tuesday, touching $2.47 a barrel.

Analysts were also considering the outlook for a strengthening dollar as bearish for oil prices next year. A stronger dollar makes greenback-traded commodities more expensive for holders of foreign currencies.

The dollar has risen to a six-year high against the Japanese yen and is at its strongest since 2012 against the euro. The Russian ruble as also slumped to a record low against the dollar as oil prices have fallen and Western countries have increased sanctions on its economy over Ukraine.

At 1420 GMT on Wednesday, Brent crude oil was up 36 cents a barrel at $95.03 a barrel. (Reporting by Arpan Varghese and Ratul Ray Chaudhuri in Bangalore; additional reporting and writing by David Sheppard in London; Editing by Veronica Brown and William Hardy)

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