An expected demand slump and supply glut threaten the outlook for oil prices into late 2016, says Gaurav Sharma, Oil Analyst and Editor at IB Times, as he offers insights on the fundamentals for the oil market.
The oil market crash led to huge losses in mining stocks, and the expected year-end price target for the oil prices are only moving lower. Listing reasons for the lowering forecasts, Sharma says that the prime reasons remain the expected fall in demand (from previous assumptions), and the supply glut ahead as US shale producers attempt to come back in the game.
“The late 2016 oil demand is likely to be well below market estimates. More like 800k bpd to 1.1m bpd, as opposed to 1.2-1.4m bpd”, quotes Sharma. As the oil market faces another danger of a US shale producers led supply glut, Sharma further forecasts oil prices to remain in the $40-$50 range, with more effort expected to fight off $40 than capping $50.
Continuing to highlight the problems ahead being faced by the oil market, Sharma doesn’t see anything much on the horizon which would flare up oil demand.