Quarterly Oil Market Update (Q4-2015):Oil prices are going to be lower for longer
Oil Market ReportThe current period of low prices is set to remain throughout 2016, pulled down primarily as a result of persistently high oil supply. All-out competition between members of OPEC will be the main reason for continued oversupplied markets. We expect to see OPEC production rising by a further 500 thousand barrels per day (tbpd) by Q4 2016 year-on-year with most of the rises coming from increased Iranian supply. Meanwhile, recently downward revised global economic growth forecasts by the IMF point to moderate yearly growth in oil demand. All of these factors have led us to cut our full year 2016 Brent forecast to $33 per barrel (pb), from $47 pb previously, and 2017 forecast to $44 pb from 58 pb previously.
Quarterly GDP update: (Oil sector pushes up overall growth in Q1-15)
Oil Market ReportLatest data released by CDSI show a Saudi economic growth of 2.4 percent year-on-year, 0.8 percentage point higher than in the fourth quarter of last year. Contribution to growth has remained unchanged with the non-oil sector becoming once again the main growth driver, while oil sector growth and contribution have turned positive for the first time since Q2-14. We assume that annual economic growth will trend higher for the remainder of the year, owing to an increase in oil output, while the non-oil private sector remains robust.
