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[LONDON] Barclays slashed its 2015 Brent crude oil price forecast to US$44 a barrel from US$72 on Wednesday citing Opec's refusal to cut output, non-Opec supply growth and slower consumption.
The investment bank cut its 2015 average price forecast for WTI crude to US$42 from US$66 per barrel.
"We expect to see further downside to prices in the next few months, with both WTI and Brent likely to trade into the high US$30s before the oil price decline is arrested," analyst Michael Cohen said in a note to clients.
Its revised forecasts for Brent and West Texas Intermediate are the most bearish from banks such as Goldman Sachs, Morgan Stanley, Deutsche Bank and Bank of America Merrill Lynch.
Oil prices fell more than one per cent on Wednesday as the dollar strengthened, while an industry report showing a larger-than-expected rise in Us crude inventories also weighed.
Brent crude was down 45 cents at US$49.15 at 0717 GMT. WTI at US$45.68 was down 55 cents.
Lower oil prices should only have a muted effect on demand response and would not be sufficient to balance the market on its own during 2015, making it unlikely that prices will move back above US$50 before next year, Barclays said.
US oil production will adjust slower than the market expectations in 2015 as the industry responds to lower prices by cutting costs and improving efficiencies in order to survive and even grow during the price downturn, the bank said.
"Though rig counts are falling in North America, there are very few signs yet in any of the incoming data that physical supplies are getting cut fast enough or that price sensitive demand is picking up at anywhere near the rate necessary to bring the oil market back into balance anytime soon," Barclays analysts said.
The bank said it expects prices to rebound in 2016 with Brent averaging US$60 per barrel and WTI US$57 per barrel.