Market research

BMI
South Korea oil demand in the second quarter is going to be strong as refiners are set to increase their crude use after planned maintenance and refiners capitalize on less competition with China’s independent processors, according to a note issued on April 27 by Fitch’s BMI Research. Demand is supported by agriculture and the transport sector as well as an increase in air conditioning, it said. Iran is seen by BMI as the “top beneficiary” of South Korea’s increase in oil demand. Iran’s position as a supplier rose above that of Iraq, Kuwait, and Qatar and it became South Korea’s second-largest crude supplier after Saudi Arabia, BMI said.
ADIA
Christof Ruehl, the head of research at Abu Dhabi Investment Authority (ADIA), expects crude oil prices might fall to $40 a barrel or even below if the Organization of the Petroleum Exporting Countries (OPEC) and allied producers did not extend their agreement to collectively cut production for another six months. The six-month cuts that took effect in January have set a floor for prices, but an increasing supply from US shale oil producers along with an increase in inventories to record-high levels are keeping the price of crude from rising beyond the upper $50s, Ruehl said at a conference in Dubai on April 26. “If OPEC and the coalition do not extend the agreement to continue cuts, that price floor will go,” was quoted as saying by Bloomberg. “Without it, prices would fall, and there is nothing to stop oil going below $40 a barrel.”
JBC
The Vienna-based researcher expects the oil market to move toward tighter fundamentals, meaning a situation where demand edges higher than supply, in May/June. JBC Energy said in a note on April 25 that a return of $60 for a barrel of Brent “does not look unreasonable,” and it could coincide with a return of backwardation in the market. Backwardation is the situation when current prices of oil are higher than in the future; therefore, more traders are inclined to sell oil than to store it for future sales.
RBC
RBC Capital Markets believes that the rising oil production outside of OPEC, particularly in the “Lower-48” states in the US, is creating market headwinds for oil prices, Kurt Hallead, RBC analyst with the energy and utilities equity team, wrote in a note on April 25. The bank expects Brent to average $57 in 2017, down from $58 in the previous estimate. In 2018, Brent prices will move up to $63 but down from $66 it previously estimated. The other major crude benchmark, West Texas Intermediate (WTI), is expected to average $54.50 in 2017, down from $56, while it will average $60 in 2018, down from $63. Brent is set to trade at a $2.77 premium per barrel to WTI in 2017, it said.

Source: Arab News