Crude prices fell on Friday on back of a stronger US dollar and the scare created by Russia over global supply of crude lasting till next year.
The drop in Nigeria’s oil production due to resurgence of militant activity in the southerly Delta has a significant impact on the global front, said Miswin Mahesh, Energy Analyst at Barclays.
He said that the Canadian wildfire cost around a million oil barrels, but it was a temporary setback, whereas, crises in Nigeria have led to a drop of around 1.6 million barrels per day.
Miswin forecasts Brent to trade at USD 46, USD 41 and USD 51 per barrel for Q2, Q3 and Q4 of 2016, respectively.
For 2017, Barclays has a forecast of USD 60 per barrel of crude and has a bearish sentiment in the short-term for oil, he added.Below is the verbatim transcript of Miswin Mahesh’s interview with CNBC-TV18's Manisha Gupta. Q: What is your sense really coming in on the Russia remarks. The market really seems to be taking it quite seriously. Do you think the impact is right now there? A: I don't think that in itself is causing all of the weakness. It is to do with a bit of fatigue when it comes to the length in the market at the moment. In terms of the long positions that has been high. Some of it did clear when we saw the Canadian wildfires happened over the last week as prices sort of did on the physical markets at least started raising higher. A lot of the financial spec length started exiting it was a good opportunity for them to do so then. But then what is the big focus for the oil markets at the moment is A: refinery margins how that is coping up and also Nigeria. Nigeria\\'s oil outage is significant and the developments there are very worrying and those are the two things we are focussing on. Q: So, some pressure that is coming into the markets right now. How would you read that and there is 1.5 million barrels of excess even now in the global markets. How soon do you see the equilibrium coming in? A: It has fastened up quite a bit. We had expected the markets to balance by Q4 2016 if not Q1 2017 when we actually have the first oil stock draws but what has tightened it up so quickly is the fact that we have lost close to 600,000 barrels a day from Nigeria. The Canadian wildfires that have got in close to a million barrels a day, although that was very temporary and that supply outages have helped in a remarkable way along with the fact that US supplies have started falling as well. So, it is a combination of all of this that has just made the markets fairly tight at the moment. Demand is not that bad. Oil demand is sort of around 1.1-1.2 million barrels per day in terms of growth.
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