See Brent crude around 37-38/bbl next year: ANZ Research

Daniel Hynes, Senior Commodity Strategist at ANZ Research believes there is further weakness in store for crude, particularly till oversupply in the market continues. The OPEC has decided not to cut its oil production and neither has US, therefore weakness for crude in the short-term is a given, Hynes says in an interview to CNBC-TV18. In the next six months he expects Nymex crude around 35 per barrel and Brent around USD 37-38 per barrel. At a meeting in Vienna earlier in the month, the Organization of the Petroleum Exporting Countries (OPEC) decided against cutting its oil output to lift prices.Below is the verbatim transcript of Daniel Hynes' interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.Latha: We have seen these steep falls, do you think crude corrects from hereon because of the inflation data from China?A: I think the indications that we look at still see against our risks on oil markets. Certainly in early 2016 we are expecting to see additional crude from Organization of the Petroleum Exporting Countries (OPEC) now into the market particularly from Iran and we still haven’t seen any fall or slowing in growth in US oil production as well. So the market certainly in the short-term looks particularly weak.Latha: You mean it could continue to go like this even for the remaining few days of 2015? We are already touching USD 40 per barrel in Brent, does 2015 end with Brent below USD 40 per barrel?A: The market certainly hasn’t got what it has been looking for that has been supply cuts in an oversupplied markets. So until those things start to emerge, they are going to continue to pressure producers to act on that and that means further declines even if we do see it being fundamentally oversold as the reaction from producers has clearly not what the market has been looking for.Sonia: There is this ballooning glut between half a million to two million barrels a day of crude, much higher demand, do you think that situation could get worse in the near-term, what are you factoring in? Coming back to the price levels, with Nymex close to about USD 38 per barrel and Brent at USD 40 per barrel in the next six months where do you see Nymex and Brent?A: We certainly expect to see the market weaken in terms of its surplus over the next few months. We are now expecting to see increased OPEC production with Iran coming back in once sanctions are lifted and we certainly haven’t seen any significant fall in US production.To add to that the demand outlook has been positive so far in 2015, we do expect to see that that growth peter out a little bit as the impact of the price falls does lessen for consumers. So on that basis, we are seeing slightly high surplus in 2016. We think Brent prices could end as low as USD 37-38 per barrel next year and West Texas Intermediate (WTI) around USD 35 per barrel.