July 30, 2015 / 10:48 AM / 5 years ago

Oil prices set to recover but oversupply will cap gains - Reuters poll

(Reuters) - Oil prices are likely to bounce back from six-month lows to end this year higher and climb further in 2016 thanks to rising demand from emerging markets, a monthly Reuters poll showed on Thursday.

An oil field is seen at sunrise near Bakersfield, California October 14, 2014. REUTERS/Lucy Nicholson/Files

But the survey of 30 industry and bank analysts said a global supply glut and strong dollar should cap price gains and keep fuel costs well below recent averages over the next couple of years.

“Prices are at unsustainable lows after an exaggerated selloff,” said Carsten Fritsch, analyst at Commerzbank in Frankfurt.

Benchmark Brent hit a low of $52.28 a barrel on Tuesday, its cheapest since Feb. 2 as an oversupply of crude and the rising dollar combined with worries over China, the world’s biggest energy consumer.

Saudi Arabia is pumping record volumes of crude oil as it battles for market share, and analysts say the Organization of the Petroleum Exporting Countries is now producing around 3 million barrels per day more than required.

But prices have fallen to below break-even levels for some oil producers, including a number of shale companies in the United States, and analysts say this should help prices recover.

The Reuters survey forecast Brent would average $60.60 a barrel in 2015 and $69 in 2016, compared with an average so far this year of around $59 and just under $100 in 2014.

The poll forecast U.S. light crude would average $54.90 a barrel in 2015 and $63.80 in 2016, up from an average of $53 in the year to date.

Eleven analysts who had contributed to the June oil poll cut their 2015 Brent outlook in the latest survey, while 15 kept forecasts unchanged. Fifteen analysts forecast Brent above $60.90, compared with 16 in last month’s poll.

Global fuel demand should respond positively to recent price falls, with greater demand from refineries in China and the United States, Thomas Pugh of Capital Economics said.

A nuclear deal with Iran should eventually lead to more oil being exported from the Islamic Republic, but forecasters say supply may take time to come through and the news may already be factored into prices.

“The deal has already weighed on prices with the entire forward curve for crude markers trading significantly lower,” said Beleris Giorgos, senior analyst with Thomson Reuters GFMS.

DNB Markets and Bernstein had the highest 2015 forecast for Brent at $65 a barrel. Natixis had the lowest Brent 2015 view at $56.70.

Additional reporting by Vijay Vedala in Bengaluru; Editing by Christopher Johnson and Dale Hudson

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