Investment Banks Disagree On Oil Price Recovery In 2017

Global investment banks have differed on their forecasts on the recovery of crude oil prices in 2017, a recent survey on the projections of 12 banks has shown.

Crude prices dropped from a peak of $115 per barrel in June 2014 to a 13-year low of $27 per barrel in February in 2016.

The global benchmark Brent crude also traded at $57.89 per barrel on December 12, 2016 before dropping to its current average of $55.

But the result of the survey by wall Street Journal indicated that the 12 banks – Credit Suisse, BNP Paribas, ING, Commerzbank, Deutsche Bank, Societe Generale, Citigroup, JP Morgan, Barclays, RBC, Bank of America Merrill Lynch and Standard Chartered – all predicted a US crude price of around $45 per barrel and above in 2017.

However, three banks forecast that 2017 will end with crude oil selling at below $50 per barrel, while nine of the banks predicted that oil will close above $50 per barrel in 2017, with Standard Chartered making the highest forecast of about $68 per barrel for the fourth quarter of 2017.

In the first quarter of 2017, half of the banks forecast prices below $50 per barrel, while the remaining six saw oil selling above $50 per barrel, according to the December 2016 survey conducted by the Wall Street Journal Market Data Group.

Three banks – Deutsche Bank, Barclays and Bank of America Merrill Lynch – saw oil averaging $55 in the first quarter.

The survey showed that in the second quarter, five of the banks predicted below $50 per barrel for the price of oil, with ING and JP Morgan making the lowest forecasts of $45 per barrel.

Seven of the banks predicted oil prices above $50 per barrel in the second quarter, with Standard Chartered making the highest forecast of around $63, followed by Barclays’ average of $60 per barrel.

JP Morgan and ING saw US crude price settling around $45 in the second quarter 2017, according to the survey.

In the third quarter, only three banks – ING, Commerzbank and JP Morgan – predicted below $50 per barrel for the price of oil, with forecasts hovering around $45, $48 and $45, respectively.

The other nine banks predicted an oil price of above $50 per barrel in the third quarter, with Standard Chartered giving the highest forecast of close to $65 per barrel, followed by Deutsche Bank and Bank of America, both of which predicted an average of $64.

Four banks – RBC, Barclays, Societe Generale and BNP Paribas – saw the price of US crude settling around $55 in the third quarter.

In the fourth quarter of 2017, ING, Commerzbank and JP Morgan still believed that oil price would remain around $45 per barrel.

However, Standard Chartered predicted the highest recovery of oil at about $68 per barrel in the fourth quarter of 2017, followed by Citigroup and Bank of America, which predicted around $62 and $61, respectively.

Credit Suisse and Societe Generale both saw oil prices around $60 per barrel in the fourth quarter, while RBC and BNP Paribas forecast $58 and $55 per barrel for oil, respectively.