Analysts‘ predict lower oil prices in Q4: Vandana Hari

Global oil demand growth is expected to slow in 2016 from a five-year high in 2015, according to the International Energy Agency's (IEA) latest report. Oil prices have been through a period of volatility and decline for more than a year now, with benchmark Brent crude falling from a peak price of USD 114 a barrel in June 2014 to trade around USD 50 a barrel this week.Vandana Hari, Asia Editorial Director of Platts is not surprised at the IEA forecast and says it was expected because the IEA usually goes by the forecast on economic outlook, which the IMF, ADB has lowered in the recent times. “The world is now expected to enter into a tricky situation as far as economic growth in emerging market is concerned,” says Hari.So, since the economic growth in 2016 is not expected to be as strong as it was in 2015, it is only natural that oil demand too will go down. According to her, one way to look at is it if economies are not generating enough jobs then no matter how low the oil prices are the demand will still fall. However, IEA predictions does not say that the demand will not grow but it will not be as strong in the next year as it was in the current one, says Hari.She said the house usually monitors a dozen or so of the top analysts’ forecasts on oil prices, and most of them have revised their forecast down. Although it is only a quarter left into 2015, analysts’ have revised down the 2015 forecast as well. They expect in Q4 prices to be even lower than the first three quarters, says Hari.She says analysts’ have lowered their forecast for 2016 and some also for 2017. Therefore the trend from the forecasts seems to be that there could be some recovery in prices in 2016 and recover some more in 2017 underpinned by supply from US. However, the house is skeptical of this price recovery on back of IEA forecast. So according to consensus, the forecast for Brent could be around USD 50-55 per barrel this year and maybe up by USD 5 next year.for the entire interview watch video