Oil forecasts dive after Opec keeps output target: Reuters poll

[LONDON] Oil price forecasts have collapsed in the wake of Opec's decision not to cut output despite a global glut, Reuters monthly poll showed on Thursday.

The survey of 31 economists and analysts, conducted after the Organization of the Petroleum Exporting Countries meeting on Nov 27, forecast North Sea Brent crude would average US$82.50 a barrel in 2015, down US$11.20 from last month's poll.

That is the biggest downgrade in average forecasts since the global economic crisis in 2008 and compares with an average price of US$102.70 for Brent so far this year. The poll forecast Brent would average US$87.40 in 2016.

Oil prices have fallen by more than a third since June with Brent reaching a five-year low on Monday of US$67.53 a barrel and US crude touching US$63.72.

Twenty-one of the 29 analysts who contributed for both the October and the latest poll slashed their forecasts. Fifteen analysts said they changed their forecasts after the Opec meeting.

"Opec's decision to maintain its production entrenches a surplus," said Gareth Lewis-Davies, strategist at BNP Paribas.

"At current levels of Opec crude output, the market faces 1.5 million to 2 million barrels per day of surplus." In Reuters monthly oil price poll in June, analysts had forecast Brent would average US$104.80 in 2015.

Italy's Nomisma Energia had the lowest 2015 Brent forecast in the latest Reuters poll at US$69.18 a barrel, while US based brokerage Sanford C. Bernstein had the highest forecast at US$104.

"Opec's abandoning of oil market management last Thursday feels like one of those seminal points in the history of oil," said Credit Suisse analyst Jan Stuart, who cut his 2015 Brent price forecast by US$16.25 to US$75.25.

But some analysts were more cautious. "I think we should not jump into conclusions and adjust forecasts already when markets are in such a panic mode," said senior energy economist Hans van Cleef of ABN AMRO, who kept a US$90 Brent forecast for 2015.

The poll forecast US light crude would average US$78.00 a barrel next year, down US$10 from October's consensus. WTI has averaged US$96.00 in 2014.

Brent's premium to US crude will narrow to US$4.50 a barrel in 2015 from US$6.85 so far this year and US$10.58 in 2013, the poll said.

REUTERS