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Oil and gas analysts at BMI Research expect the value of Brent Crude oil to continue rising over the next few years, according to a new report published by the company.
In the report, the analysts forecast that Brent will increase to $75 per barrel in 2019, $78 per barrel in 2020, and $80 per barrel over 2021 and 2022. This forecast is significantly higher than the Bloomberg Consensus, which sees Brent Crude at $63 per barrel in 2019, $67 per barrel in 2020, $66 per barrel in 2021 and $63 per barrel in 2022.
“Over the medium term to 2022, we are bullish on crude prices, with strengthening global demand outstripping supply growth,” BMI analysts stated in the report.
The analysts highlighted that the lower oil price environment over the past three years has led to a tapering of the global projects pipeline beyond 2020. These delays to final investment decisions are expected to combine with persistent decline rates on existing production assets to lower total supply growth, according to BMI.
“Whilst we believe higher prices will elicit a strong supply response from the US, the growth will be unable to plug the demand gap, pushing the market into a sustained deficit from this year,” the analysts stated.
BMI expects to see Indian and Chinese demand continue to perform well over the next few years, according to the report.
“Both markets’ consumption is forecast to remain robust over the coming years, alongside broader economic growth and growing consumer demand for light distillates and petrochemicals,” BMI analysts stated.
“Together the two markets compromise of almost half of the emerging market demand basket and will continue to be the fulcrum of demand growth over the next decade,” the analysts added.
BMI conceded that rising fuel prices posed ‘some risk’ to emerging market consumption, but said this wasn’t sufficient enough to derail growth. source: Rigzone