HOUSTON – A recent update from Raymond James & Associates’ US Research group advised that it was raising its 2017 and 2018 oil price forecasts by $5/bbl, predicting per-barrel costs of $75 for US crude benchmark WTI and $80 for European Brent.
“We are raising our 2017/2018 oil price forecasts by $5/bbl. Specifically, our 2017 forecast for WTI increases from $75 to $80 and Brent increases from $79 to $83–this marking the cyclical peak of the oil recovery,” the report noted.
“Similarly, we are initiating a 2018 forecast for WTI ($75) and Brent ($80), which is $5 higher than our previous long-term deck.”
The financial services organization said it was basing this increased assessment on several factors, seeing three key global oil supply variables that have recently turned “meaningfully more bullish.”
“Over the past few months, we’ve gained even more confidence that tightening global oil supply/demand dynamics will support a much higher level of oil prices in 2017,” the report read.
“We continue to believe that 2017 WTI oil prices will average about $30/bbl higher than current futures strip prices would indicate.”
The analyst maintained its long-term (2019 and beyond) forecast of $70 WTI and $75 Brent.
This $70 price deck should support sufficient long-term US oil supply growth to offset slowly rising global oil demand and falling non-US oil supply.
Raymond James specifically pointed to supply interruptions from Nigeria, Canada, Venezuela, and Libya; greater structural and activity-related supply declines from China, Colombia, Mexico, Brazil; and Angola; and lower projected 2017/2018 oil supply growth from the US due to emerging industry bottlenecks as its reasons.
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