Oversupply, weak demand to depress oil prices

LONDON: Increasing supplies from North America and OPEC nations coupled with sluggish global demand will push oil prices lower in 2014, a Reuters poll showed.
The Reuters monthly survey of 30 analysts produced a consensus forecast for Brent crude oil to average $104.80 per barrel in 2014, down from an average of $108.70 last year.
Last month’s poll saw Brent averaging $105 this year.
Brent prices will continue to slip in 2015 and 2016, averaging $102.00 and $99.90, respectively, the poll showed.
“Crude oil supplies are set to improve significantly as maintenance in Russia and the North Sea oilfields abates, US supply continues to grow and turmoil in the Middle East subsides,” said Chris Tevere, senior strategist at Gain Capital.
“We think demand from the OECD could stabilize year-on-year, while growth in non-OECD may disappoint.”
Analysts were divided on the likely volume of supplies from oil producers in the Organization of the Petroleum Exporting Countries due to unrest in Libya, Iraq and sabotage in Nigeria.
“Even though there are prospects of Iranian oil coming back online, it will most likely take longer than markets expect, due to political and technical complications,” said Abhishek Deshpande, commodities analyst at Natixis.
Analysts forecast US light crude, also known as West Texas Intermediate or WTI, would average $96.60 a barrel in 2014, down from the $98.04 average in 2013.
WTI has averaged $98.43 so far this year, while Brent has averaged $107.90.
Brent’s premium to its US counterpart was seen narrowing to $8.20 per barrel from last year’s $10.58, the poll showed.
Raiffeisen Bank International had the highest 2014 Brent forecast at $112 a barrel, while Capital Economics had the lowest at $94.