SocGen Cuts 2016 Oil Price Forecast on Stubborn Oversupply
Societe Generale on Wednesday lowered its crude oil price forecast, saying recent price gains were weak and based on temporary disruptions to a glut in output.
The bank cut its 2016 average Brent price outlook by $4.38 to $38.12 per barrel, and its WTI price view, by $4.30 to $36.20 a barrel.
“In 2016, any sustained rally above $45 should be self-limiting” because U.S. shale producers would increase spending, drilling and production, analysts at the bank said in a note.
Global supply and demand will roughly balance out only in 2017, they said.
The oversupply was caused by strong output from the Organization of the Petroleum Exporting Countries, led by Saudi Arabia and Iraq, and “resilient” U.S. production, the analysts said. Declines in U.S. shale output have been “too moderate to make a dent in ongoing global stock builds,” they added.
