Unsustainable upswing (ICP forecast as of 10 March 2016)

March 10, 2016 • Tell FriendsPrinter Friendly

The summary of market info as of 10 March 2016 is as follows:

  • The recent rally is the result of a sentiment shift after a number of countries agreed to freeze output at January levels, however it seems unstable due to some OPEC country member such as Kuwait and Iran is disagree to join the deal. There will be a meeting schedule on March 20 to renew talks among them on an agreement to cap oil output.
  • Some analyst see that this freeze-supply-act would only crystallize oversupply currently running at two million barrels a day. The main concern is a big slump in exports in China, as reported on Monday, which will be negative for demand, while US output has remained stubbornly above nine million barrels a day.
  • EIA reported lower forecast prices than previous month, reflects oil production that has been more resilient than expected in a low-price environment and lower expectations for forecast oil demand growth. WTI crude price are expected to average the same as Brent in 2016 and 2017. EIA forecasts WTI at $34.29 for 2016, while Brent at $34.32/bbl for 2016.

Based on the graph, we estimate SLC will be increased to $33.20/bbl in March 2016 and will average $ 33.77/bbl for full year 2016.

Mar 2016

Disclaimer: The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Opinions expressed are our current opinions as of the date appearing on this material only and would be updated every month.

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