New York: World oil prices could be $5 to $15 a barrel lower than forecast next year if oil-related sanctions against Iran are lifted, the US government’s energy agency said yesterday.
In its monthly report, the Energy Information Administration said US oil production growth was slowing even more quickly than it expected a month ago, while demand was higher than earlier forecast. But the agency left its price forecasts unchanged, putting Brent at $59 this year and $75 a barrel next year — with downside risks from Iran’s return. “A lifting of sanctions against Iran should a comprehensive nuclear agreement be concluded could significantly change the forecast for oil supply, demand, and prices,” EIA Administrator Adam Sieminski said in a statement.
The agency said that Iran is believed to hold at least 30 million barrels of crude in storage, and that the nation could ramp up crude production by at least 700,000 barrels per day (bpd) by the end of 2016. Analysts have also said production would likely recover next year if sanctions are eased. Meanwhile, the EIA cut its US crude oil production growth forecast for 2015 to 550,000 bpd, versus 700,000 bpd in its March forecast, while the 2016 growth forecast was lowered to 80,000 bpd from 140,000 bpd a month ago.
“US crude oil production is expected to peak this year in the second quarter and then decline in the third quarter, before picking up again toward the end of this year as projected higher crude prices in the second half of 2015 make drilling more profitable,” Sieminski said.
Since June, crude prices have been effectively fallen by more than 50 percent on oversupplied markets and lackluster demand, resulting in falling rig counts and major capital expenditure cuts.
Reuters
Brent trumps Nymex in war of crude oil benchmarks
SINGAPORE: Investor positions in Brent crude oil futures have risen to a historic high and outnumbered contracts in US futures by the most ever as more traders held the North Sea benchmark as a truer reflection of global market conditions.
Brent’s open interest on the Intercontinental Exchange (ICE), or the number of outstanding contracts held by market players, increased to 1.99 million lots as of the end of March. That compared with 1.72 million lots for crude futures on the New York Mercantile Exchange (Nymex).
For a long time, Nymex’s West Texas Intermediate (WTI) futures had been the leading benchmark, given the United States’ position as the world’s biggest consumer, importer and trader of crude oil. That changed this decade with the shale boom, which turned the US into one of the world’s top producers and reduced its need to import. At the same time, a US ban on exporting crude has meant the country’s oil is trapped in storage tanks at home. That has pulled WTI prices down to levels that do not reflect global markets and diminished its hedging allure for traders.
In late 2014, Brent’s open interest overtook that of US crude futures. In the same year, Brent’s weighting in several commodities indexes increased at the expense of WTI, according to bankers. WTI had been popular with financial players, but this seems to be also changing with more hedge funds likely turning to Brent, said Richard Gorry, director of consultancy JBC Energy Asia.
“I think if WTI remains a regional crude, then Brent will continue to benefit. In the unlikely event that the US lifted the export ban, then we might see WTI reassert its dominance,” Gorry said. Reuters
NEW YORK: Oil futures rallied, erasing losses on strong jobs data and US government forecasts for lower domestic crude production growth and higher global demand for oil. US job openings surged to a 14-year high in February. US May crude was up $1.65 at $53.79 a barrel at 1658 GMT, having traded from $51.17 to $53.84. Brent May crude was up $1.10 at $59.22. Reuters
