Brent crude: We still expect the barrel at USD46/bl in Q4 despite Doha - Danske

According to Jens Nærvig Pedersen, Senior Analyst at Danske Bank, crude oil will recover during 2016 despite the lack of agreement on a production freeze on Sunday in Doha.

Key Quotes:

“The highly anticipated meeting of a group major OPEC and non-OPEC oil producers in Doha on Sunday ended without a deal. On the table was a proposal by Saudi Arabia, Russia, Venezuela and Qatar to freeze oil production at January’s level in a bid to support the oil price.”

“In our view, it was unlikely to begin with that Iran would participate in a production freeze accord without conditions allowing the country to regain some market share and a deal not including Iran would not have had a material impact on the short-term outlook for world oil supply anyway, since the producers meeting in Doha are all producing close to full capacity. OPEC is set to have its next bi-annual meeting on 2 June.”

“Since we had not factored in any significant effect from a production freeze accord in our recent oil price forecast, the failed Doha talks do not alter our outlook for the oil price. We still look for the price of Brent crude to average USD46/bl in Q4 16 and USD52/bl in 2017 on the back of a lower USD, stronger global economic activity and a decline in non-OPEC oil output.”