Brent crude oil prices continued to climb in recent weeks on the
back of strong demand, reduced supply by key oil producers
and escalating geopolitical risks. On 7 September, oil prices
traded at USD 76.0 per barrel, which was 5.1% higher than
on the same day last month. Moreover, the benchmark price
for global crude oil markets was up 13.8% on a year-to-date
basis and was 40.3% higher than on the same day last year.
Despite heightening trade tensions between China and the
United States, the global economy continues to post strong
growth rates, propelling demand for the black gold. Moreover,
global oil output remains constrained despite increased oil
production in key countries such as Russia and Saudi Arabia.
Venezuela’s oil production has collapsed as a result of years
of underinvestment and mismanagement in the oil sector.
Angola’s output is also suffering from the country’s high
relative cost of production and entangled bureaucratic system.
Moreover, security threats in Libya and Nigeria continue to
dampen oil production. Nevertheless, Iran is currently the
most serious risk to global oil supply as the U.S. reiterates
its wish to reduce Iran’s oil shipments to “zero” by November.
Recent data suggests that U.S. efforts have already started to
bite with Iranian oil shipments down from April’s peak of 3.1
million barrels per day (mbpd) to around 2.1 mbpd in August.
Looking forward, planned supply increases by OPEC and
Russia in order to fill the gap left by other key producers in
recent months will keep Brent crude oil prices under control.
FocusEconomics panelists see prices averaging USD 73.9
per barrel in Q4 2018, before slipping to an average of USD
71.6 per barrel in Q4 2019.
5 of our panelists upwardly adjusted their Q4 2018 forecasts
compared to last month. Meanwhile, 24 forecasters kept their
projections unchanged, and 7 cut their forecast.
The spread between the minimum and the maximum oil
price forecasts remains relatively large, with numerous
developments simultaneously affecting the oil markets in
recent weeks. The panelist forecast range for Q4 2018 runs
from a minimum of USD 64.0 per barrel to a maximum of USD
82.0 per barrel.
West Texas Intermediate (WTI) crude oil prices recovered in
the second half of August after they hit a two-month low on 15
August. This trend was partially reversed during the first week
of September on trade war concerns and economic woes in
emerging markets. WTI crude oil prices benefited from strong
demand in the U.S. and fears of reduced global supply in the
wake of the drop-off in Iran oil exports. WTI crude oil prices
traded at USD 67.7 per barrel on 7 September, which was
2.1% lower than on the same day last month. Moreover, the
price was up 12.0% on a year-to-date basis and it was 37.9%
higher than on the same day last year.
Oil prices are buoyed by strong demand in the United States
due to rapid economic growth. According to the Energy
Information Administration, crude oil inventories fell by 4.3
million in the week ending 31 August. Oil prices also climbed
due to fears of reduced global oil supply as U.S. sanctions
against Iran threaten to put pressure on global output. Tropical
Storm Gordon, which barreled the eastern Gulf of Mexico and
forced some offshore oil platforms to shut production, also
supported oil prices at the start of September. That said,
the impact was relatively modest and the region’s energy
platforms resumed production shortly after.
Although oil prices will remain elevated throughout the end of
this year, panelists acknowledge that increased oil production
and an uncertain global economic outlook will exert a slight
downside pressure on prices. For Q4 2018, analysts expect
prices to average USD 69.0 per barrel. They see prices
decreasing slightly in Q4 2019 to USD 67.5 per barrel.
In response to recent mixed messages about what to expect in
the evolution of oil prices, 6 of our forecast panelists upgraded
their projections for Q4 2018 from last month. Meanwhile, a
majority of 22 left their forecasts unchanged, while 3 made a
cut to their projection.
Although oil prices will remain high this year, our analysts
foresee some volatility going forward. For Q4 2018, the
maximum price forecast is USD 80.0 per barrel, while the
minimum is USD 60.0 per barrel.
GAS NATURAL:
Natural gas prices fell in August and early September, due
to expectations of milder weather in upcoming weeks and
a significant increase in supply capacity as new pipelines
become operational. Recent weeks have seen inventories
replenished at an average pace and, although total stocks
remain nearly 20% below their five-year average, lower
predicted demand in late September and October should
lead to stronger injections going forward, which is putting
additional downward pressure on prices. On 7 September, the
Henry Hub Natural Gas price was USD 2.78 per one million
British thermal units (MMBtu). The price was 4.2% lower than
on the same day in the previous month and was down 6.0%
on a year-to-date basis. In addition, the price was 6.9% lower
than on the corresponding date in 2017.
Record-high supply levels should limit price increases over
the near-term, with U.S. shale production capable of rapidly
ramping up production in response to higher demand.
However, potential colder-than-average temperatures
heading into the winter season could still provide some
support to gas prices due to the still-low level of inventories. In
addition, lower expected production from several key players,
including Australia and the Netherlands, will also somewhat
tame increases in U.S. and Russian output going forward.
Looking over the medium-term, fundamentals should remain
strong despite higher supply, as demand growth is expected to
be robust, both in the U.S. and abroad. Most notably, China’s
efforts to transition away from coal to cleaner energy sources
will be a major force in market growth. As a result, prices are
likely to rise in the future.
FocusEconomics panelists see the spot price averaging USD
2.96 per MMBtu in Q4 2018. They expect it to climb to USD
3.09 per MMBtu in Q4 2019.
In light of recent developments, 14 panelists left their forecasts
unchanged this month, while 1 decided to upgrade their price
forecasts for the commodity. Meanwhile, 3 revised down their
projections.
The maximum price forecast for Q4 2018 was USD 3.30
per MMBtu, while the minimum forecast was USD 2.50 per
MMBtu.
Por Focus Economics - https://www.focus-economics.com/ - Desde Barcelona España
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