Crude & Brent Oil Fundamental Analysis October 7, 2014 Forecast

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Updated: Aug 24, 2015, 23:00 UTC

Analysis and Recommendations: Crude Oil added 37 points to trade at 90.11 while Brent Oil added 47 points as energy traders are not sure what to expect

Analysis and Recommendations:

Crude Oil added 37 points to trade at 90.11 while Brent Oil added 47 points as energy traders are not sure what to expect from OPEC as a price war develops and production continues to grow. Data this week showed German factory activity shrank for the first time in 15 months, while European Central Bank President Mario Draghi disappointed stock investors when he failed to provide a specific stimulus program for the euro zone’s flagging recovery. In China, data showed the country’s manufacturing sector is barely growing. There is little implied demand for oil products while global production continues to soar. US production continues to hit record highs as technology for shale production continues to increase the amount of production available.

Energy analysts have made the largest downward revision to their oil price forecasts in almost two years, a monthly Reuter’s poll showed, with the marked weakness in the price of Brent seen persisting into 2015.

The survey results pose a challenge to members of the Organization of the Petroleum Exporting Countries who have largely argued prices will recover from two-year lows hit below $95 a barrel on stronger demand in the fourth quarter. The poll of 30 analysts said international benchmark Brent crude oil would average $103.30 a barrel in 2015, down from $105.30 in the August survey. The $2 average price cut is the largest month-on-month decrease according to survey data going back to the start of 2013. Brent has averaged near $110 a barrel since 2011 but has fallen sharply since June as US shale oil supplies outstripped expectations and Iraqi and Libyan production has risen despite violence and political unrest in the two OPEC members.

“Increasing supply from Iran, Libya and Iraq, as well as the US should ensure that supplies are more than ample,” said analyst Thomas Pugh of Capital Economics, who had the lowest Brent outlook at $90 a barrel for 2015. “Meanwhile, weak economic growth in the euro-zone and slowing growth in China should keep demand growth subdued.” Reuter’s monthly survey of OPEC production showed higher supplies from the group last month, despite calls from some members for a cut in output when it next meets in November.

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Today’s economic releases actual vs. forecast:

Cur.	Event	Actual	Forecast	Previous
EUR	German Factory Orders	-5.7%	-2.5%	4.9%
CAD	Ivey PMI		53.0	50.9

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