Thu 9 Apr 2015 12:15

Second quarter oil market report released


Report forecasts bearish oil prices during the second quarter of 2015.



Denmark-based A/S Global Risk Management has forecast bearish oil price levels during the second quarter of 2015.

In its latest report, entitled 'The Oil Market Quarterly Outlook Apr 15', Global Risk Management analyses the consequences of the steep drop in oil prices - especially for the small-sized shale oil producers - and the effect this could have on future production.

The company also looks at financials and how a possible interest rate hike in the U.S., along with the recently implemented easing measures in Europe, could influence oil prices both in the short and long term.

Global Risk Management adds that "geopolitics continues to be a potential dark horse as the situation in Yemen and Libya remains unstable", whilst pointing out also that the deal on Iran's nuclear programme could have both short and long-term consequences for oil prices.

The Global Oil Strength Index (GOSI)

The Global Oil Strength Index, or GOSI, was introduced by Global Risk in 2010. The GOSI is a single number between 0 and 100 that signals Global Risk Management's expectations for the development of oil prices. A reading below 50 indicates a declining trend and above 50 an increasing trend.

Global Risk calculates the GOSI by assigning a strength rating or index for each of three factors (Fundamentals, Financials and Geopoliticals) and then calculating a weighted average based on the three strength ratings.

Fundamentals - covering the supply and demand balance.

Financials - covering speculators' interest and the development of the financial market.

Geopolitics - covering the situation in unstable oil producing regions of the world.

Fundamentals Apr 2015 - Rating: 45 (same vs Jan 2015).

In the report, Global Risk said: "In the short run fundamentals are slightly bearish with shale oil production booming - but for the longer run, our view is bullish as current oil price levels make the number of active rigs drop and as global oil demand continues to increase."

Financials Apr 2015 - Rating: 45 (same vs Jan 2015).

Global Risk said: "The improving U.S. economy and prospect of an interest rate hike this year takes center stage. The European central bank's recent monetary easing measures have yet to be fully implemented and Greece continues to cause worries of a "Grexit" - we set financials to slightly bearish in the short term, slightly bullish in the longer term."

Geopolitics Apr 2015 - Rating: 50 (same vs Jan 2015).

Global Risk said: "Unrest in Yemen and Libya continues, Iran and six world powers managed to reach a deal - next step is to see if the deal is brought into effect from both sides. Geopolitics is set to neutral, wildcard any unexpected events in the Middle East region."

GOSI - Rating: 47 (same vs Jan 2015) - The GOSI is at the 47 level - indicating that Global Risk's oil price expectation is bearish.

Average price forecasts:

Brent Crude (US$ per barrel)

Q2 2015 - 60
Q3 2015 - 62
Q4 2015 - 62
Q1 2016 - 65

3.5% Rotterdam Barges (US$ per tonne)

Q2 2015 - 314
Q3 2015 - 324
Q4 2015 - 324
Q1 2016 - 343

0.1% CIF NWE Cargoes (US$ per tonne)

Q2 2015 - 540
Q3 2015 - 555
Q4 2015 - 559
Q1 2016 - 581

380cst Singapore Cargoes (US$ per tonne)

Q2 2015 - 340
Q3 2015 - 349
Q4 2015 - 349
Q1 2016 - 365

0.5% Singapore Gasoil (US$ per tonne)

Q2 2015 - 544
Q3 2015 - 566
Q4 2015 - 574
Q1 2016 - 596

3% US Gulf Waterborne (US$ per tonne)

Q2 2015 - 318
Q3 2015 - 324
Q4 2015 - 324
Q1 2016 - 343

N2 Heating Oil (US$ per tonne)

Q2 2015 - 536
Q3 2015 - 555
Q4 2015 - 559
Q1 2016 - 585


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