Outages to balance oil market, support prices: Reuters poll

Thu Jun 30, 2016 8:18am EDT
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By Nithin ThomasPrasad

(Reuters) - A string of unforeseen events have reduced oil supply, helping to rebalance the world oil market and push price forecasts higher over the last month, a Reuters poll showed on Thursday.

Wildfires in Canada, attacks on pipelines by rebels in Nigeria and economic crisis in Venezuela have helped cut global oil production by more than 2 million barrels per day (bpd) over the last few weeks.

A survey of 27 economists and analysts forecast Brent crude LCOc1 will average $45.20 per barrel in 2016, up $1.60 from last month's poll.

This is the fourth straight upward revision in forecasts for the North Sea crude benchmark, which has averaged $41.13 per barrel so far this year.

"We see Nigeria as a national political situation which is helping the market rebalance even faster than we've predicted before," said Raymond James analyst Luana Siegfried.

"Even if further attacks can be prevented this summer, Nigeria's production has still averaged a 60,000 bpd annual decline over the past five years, and the fall-off could accelerate with limited drilling activity," Siegfried said.

Economic crisis is expected to worsen in Venezuela, hitting its oil production, with refineries and ports suffering due to shortages and equipment failures.

"Venezuela is a progressively growing risk for the oil market as domestic unrest may translate into large-scale production outages, removing substantial volumes from the oil market," said Giorgos Beleris, analyst at Thomson Reuters' Oil Research and Forecasts.   Continued...

Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford/File Photo