OPEC On The Defensive - For Now

Published 12/04/2015, 05:19 AM
Updated 05/14/2017, 06:45 AM

OPEC will most likely announce unchanged production quotas today, and thus the OPEC (Saudi) price war will continue near term. This is widely expected and oil prices should be little changed on this announcement.

We still expect a non-OPEC supply response in 2016 as current prices are well below costs. Also the speculation in recent days that the Saudis may be willing to cut back if other OPEC and notably non-OPEC producers join suggests that the days of price war may be fizzling out.

We have kept our forecasts unchanged and thus still pencil in a slow recovery in oil prices during the course of 2016, with Brent averaging USD59/bl next year vs. USD55/bl in 2015. We still recommend clients on the consumer side to lock in 2016 prices on dips.

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