A survey of 38 economists and analysts forecast Brent crude LCOc1 to average $74.50 a barrel in 2019, lower than the $76.88 outlook last month. The poll predicted Brent would average $73.20 in 2018, mostly in line with the $73 average for the global benchmark so far this year.
“In the first half of next year we expect upward price pressure resulting from OPEC production cuts,” said Adrià Morron Salmeron, economist at CaixaBank Research.
Crude Oil analysts are increasingly pessimistic about the prospect of a price rally next year, when the outlook for demand is uncertain and supply is growing at breakneck speed, even though the market expects OPEC to cut output, a Reuters poll showed.
“Then, we expect downward price pressures from an uptick in U.S. shale production in the second half, as bottlenecks will disappear, and a deceleration of global growth.”
Of the 32 contributors who participated in both the October and November polls, 16 cut their 2019 average price forecast for Brent.
The Organization of the Petroleum Exporting Countries as well as Russia and other producers meet in Vienna on Dec. 6/7 in an attempt to support crude prices, which have fallen by over 30 percent from early October’s four-year high of $86.74.
“The oil market is definitely oversupplied at the moment. Therefore, OPEC will decide to cut output in December,” said Frank Schallenberger, head of commodity research at LBBW.
The group could announce cuts of anywhere between 1 and 1.4 million barrels per day, analysts said.
“The recent drop in prices was so strong that I think the non-OPEC members will either agree to freeze production or join in the cut.”
A slowing global economy could erode oil demand growth next year, when supply from non-OPEC countries is forecast to expand at a record pace.
Citi had the lowest 2019 forecast for Brent at $57 a barrel, while ABN Amro and Raymond James had the highest, at $90.
FUNDAMENTAL GLOOM
Non-OPEC output could rise by 1.5 to 2.2 million bpd in 2019, led by U.S. shale, a few of the analysts said.
The U.S. decision to grant waivers to countries that buy crude from Iran, hit by sanctions on its energy exports, has changed the dynamics in a market already under pressure from soaring output from the world’s top three oil producers, the United States, Russia and Saudi Arabia, analysts said.
“Uncertainty over U.S. sanctions against Iran had made the market fixated with supply. The waivers changed the arithmetic, raising the possibility of a supply glut developing in 2019,” said Konstantinos Venetis, senior economist at TSL Research.
“Sharp increases in U.S. production will be a key impediment in upside potential for oil prices in 2019,” said Benjamin Lu, commodities analyst at Phillip Futures.
Adding to the possible glut was a recovery in output from Nigeria and Libya, excluded from previous cuts because of production declines caused by unrest.
Read More : Crude Oil Continues Big Slide Despite Saudi Talk of Supply Cuts
“On the demand side, the main driver is the question how far worldwide economic growth will slow in 2019 and how far this will lead to lower dynamics of oil demand next year,” LBBW’s Schallenberger said.
The poll forecast U.S. light crude CLc1 to average $67.45 a barrel in 2019, down from $70.15 predicted in the previous poll. The contract has averaged about $66.40 so far in 2018.
On the other hand, oil demand was seen growing by between 0.9 and 1.5 million bpd in 2019, compared with 1.1 to 1.5 million bpd projected in the previous month’s poll.
