Fewer forecasters expect oil price spike before end of 2020
By John Kemp
LONDON – Energy professionals have become less bearish about the outlook for oil prices in 2017 and 2018 as downside risks have fallen, an annual survey by Reuters shows.
But price expectations for the end of the decade have changed little since the last survey in March 2016.
The survey was based on a questionnaire emailed to around 5,000 energy market professionals. Responses were received from just over 1,000 in the polling period, between Jan. 9 and 11.
Brent prices in 2017 are expected to average around $55-60 per barrel, the results showed, up from about $45-50 per barrel at the time of the previous survey.
Brent prices in 2018 are expected to average around $60-65 per barrel, up from $60 in the last survey.
But prices at the end of the decade are expected to average around $70, a figure that has not changed in the past nine months.
The increases in 2017 and 2018 are mostly the result of fewer forecasters predicting very low prices rather than more forecasters predicting high ones.
Energy professionals have become less bearish rather than more bullish, seeing less downside risk as oil markets have steadied and prices bounced off early-2016 lows.
The percentage of respondents expecting prices to average $40 or less in 2017 has fallen to just 2.5 per cent, from 23 per cent last year.
The percentage of respondents expecting prices to average $50 or less in 2018 has fallen to 15 per cent from 37 percent.
But there has been little change in expectations about oil prices at the end of the decade, with forecasts still broadly symmetrical around $70.
The percentage of respondents expecting oil price to average less than $60 at the end of the decade has not changed much, at 35 per cent compared with 42 per cent.
However, fewer forecasters expect a oil price spike before the end of 2020.
The percentage of respondents expecting prices to average more than $80 has fallen to 24 per cent from 35 per cent.
And the percentage of forecasters expecting prices to return to more than $100 per barrel by the end of the decade has fallen from almost 8 per cent to less than 4 per cent.
Among survey respondents, 24 percent are directly involved in oil and gas production (exploration, drilling, production, refining, marketing and field services).
Most of the rest are involved in banking and finance (20 per cent), hedge funds (11 per cent), research (8 per cent), professional services (8 per cent) and physical trading (8 per cent).