 "Brent crude near $95 a barrel but worst seen over")
The worst is over for global oilprices, according to UBS AG and Barclays Plc. After the biggest quarterly drop in more than two years, Brent is set to recover as Saudi Arabia cuts output and demand climbs, these said.
"Supply is the important thing and Saudi Arabia is in theprocess of rebalancing the market," Giovanni Staunovo, ananalyst at UBS in Zurich, said by e-mail on Tuesday. "The weakness in crude oil prices should come to an end."
Brent fell on Tuesday by the most since January 2 to $94.67 a barrel. It extended a quarterly drop to 16 per cent, the largest since the three months ended June 2012. The benchmark grade for more than half the world's oil will average $105 from October to December, according to the median estimate of 15 analysts compiled by Bloomberg since September 11. It gained 0.5 per cent to $95.17 on Wednesday.
Brent futures slid in the third quarter on the London-based ICE Futures Europe exchange to below the $95-to-$100 range described as "fair" by Saudi Oil Minister Ali Al-Naimi at an OPEC meeting in June. Prices fell as Libya restored output to the highest in a year, China's economic growth slowed, and crises in Iraq and Ukraine didn't disrupt supplies. Brent's premium to West Texas Intermediate, the US benchmark crude, narrowed to the least in 13 months on September 29.
Saudi Arabia told OPEC its production fell by 408,000 barrels a day — more than China's demand is projected to expand this year — to 9.6 million a day in August. The kingdom plans to keep output close to that level for the rest of the year, while the Paris-based International Energy Agency (IEA) forecasts an additional 600,000 barrels a day of demand on average through December, comparedwith last quarter.
The fourth quarter was the strongest demand period in eachof the past five years, data from the IEA show. This year willbe no different as consumption rises to 93.9 million barrels aday in the three months ending Dec. 31, before sliding to 92.8million in the first quarter of 2015, it forecasts.
"Globally, demand for crude is set to increase on aseasonal basis and as new refineries in the Middle East andChina ramp up," Gareth Lewis-Davies, a senior energy strategistat BNP Paribas SA, said by phone from London on Sept. 26.
Demand for winter fuels such as heating oil is about torise, according to the bank. The price recovery may be amplifiedby renewed interest from hedge funds and other investors, whohave pulled out of the market, BNP said.
Still, there are signs of a subdued demand rebound, soprices may struggle to rebound, Amrita Sen, the chief oil marketanalyst at Energy Aspects Ltd., a consultant in London, said ina report on Sept. 24. She forecasts that Brent will average $97a barrel in the fourth quarter.
The IEA reduced demand projections for this year and nextin its Sept. 11 oil market report, citing a weakening outlookfor global economic growth. The adviser to 29 nations has cutits 2015 global consumption forecast by 300,000 barrels a daysince July to 93.8 million a day.
Economists surveyed by Bloomberg predict China, the world'ssecond-largest oil consumer after the U.S., will expand 7percent in 2015, the slowest pace since 1990. The Chineseeconomy has grown an average 9.9 percent annually since 1990,according to data compiled by Bloomberg.
"We don't believe that it's in the interests of OPEC,notably Saudi Arabia, to allow a prolonged period of lower oilprices," Harry Tchilinguirian, the head of commodity marketsstrategy at BNP Paribas, said by e-mail on Sept. 29.
BNP Paribas, UBS and Barclays said they expect additionalcrude-production cuts this year. A surplus of about 400,000 to500,000 barrels a day needs to be eliminated, Miswin Mahesh, ananalyst at Barclays Plc in London, said by phone on Sept. 26.
OPEC pumped 30.9 million barrels a day in September,according to a Bloomberg News survey of oil companies, producersand analysts. That's 750,000 barrels a day more than the group'sown estimate of how much oil the world needs from it in thefourth quarter.
There may be additional Saudi output curbs, or supplies maytighten because of a "relapse" in fellow OPEC members Iraq orLibya, Mahesh said.
The U.S. and its allies are bombing targets in Syria andIraq, OPEC's second-biggest producer, to repel Islamic Statemilitants who have seized a swath of territory. The conflict haslargely spared southern Iraq, which the EIA says is home toabout three-quarters of the country's oil output.
Libya, the holder of Africa's biggest oil reserves, isdivided politically as its internationally recognized governmentshifted to Tobruk and a different administration controls thecapital, Tripoli. The nation's production, currently at about900,000 barrels a day, was disrupted last month by protests atthe Gialo field and a rocket attack that damaged the Zawiyarefinery, according to Mohamed Elharari, a spokesman at NationalOil Corp.
"We need to see that balancing come from the supply side,it just remains to be seen what shape it takes" said Mahesh atBarclays. "The biggest factor there is whether the OPEC cutsare going to be voluntary, or whether it's going to be arelapse."
"Supply is the important thing and Saudi Arabia is in theprocess of rebalancing the market," Giovanni Staunovo, ananalyst at UBS in Zurich, said by e-mail on Tuesday. "The weakness in crude oil prices should come to an end."
Brent fell on Tuesday by the most since January 2 to $94.67 a barrel. It extended a quarterly drop to 16 per cent, the largest since the three months ended June 2012. The benchmark grade for more than half the world's oil will average $105 from October to December, according to the median estimate of 15 analysts compiled by Bloomberg since September 11. It gained 0.5 per cent to $95.17 on Wednesday.
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Global demand growth slowed in the second quarter to the weakest since 2011, while US output climbed to the highest in three decades, International Energy Agency and US Energy Department data showed. Saudi Arabia, the biggest producer in the Organization of Petroleum Exporting Countries (OPEC), cut production in August by the most in 20 months. It will maintain output at a reduced level until the end of the year as demand for winter fuel increases, a person familiar with its policy said on September 26.
Brent futures slid in the third quarter on the London-based ICE Futures Europe exchange to below the $95-to-$100 range described as "fair" by Saudi Oil Minister Ali Al-Naimi at an OPEC meeting in June. Prices fell as Libya restored output to the highest in a year, China's economic growth slowed, and crises in Iraq and Ukraine didn't disrupt supplies. Brent's premium to West Texas Intermediate, the US benchmark crude, narrowed to the least in 13 months on September 29.
Saudi Arabia told OPEC its production fell by 408,000 barrels a day — more than China's demand is projected to expand this year — to 9.6 million a day in August. The kingdom plans to keep output close to that level for the rest of the year, while the Paris-based International Energy Agency (IEA) forecasts an additional 600,000 barrels a day of demand on average through December, comparedwith last quarter.
The fourth quarter was the strongest demand period in eachof the past five years, data from the IEA show. This year willbe no different as consumption rises to 93.9 million barrels aday in the three months ending Dec. 31, before sliding to 92.8million in the first quarter of 2015, it forecasts.
"Globally, demand for crude is set to increase on aseasonal basis and as new refineries in the Middle East andChina ramp up," Gareth Lewis-Davies, a senior energy strategistat BNP Paribas SA, said by phone from London on Sept. 26.
Demand for winter fuels such as heating oil is about torise, according to the bank. The price recovery may be amplifiedby renewed interest from hedge funds and other investors, whohave pulled out of the market, BNP said.
Still, there are signs of a subdued demand rebound, soprices may struggle to rebound, Amrita Sen, the chief oil marketanalyst at Energy Aspects Ltd., a consultant in London, said ina report on Sept. 24. She forecasts that Brent will average $97a barrel in the fourth quarter.
The IEA reduced demand projections for this year and nextin its Sept. 11 oil market report, citing a weakening outlookfor global economic growth. The adviser to 29 nations has cutits 2015 global consumption forecast by 300,000 barrels a daysince July to 93.8 million a day.
Economists surveyed by Bloomberg predict China, the world'ssecond-largest oil consumer after the U.S., will expand 7percent in 2015, the slowest pace since 1990. The Chineseeconomy has grown an average 9.9 percent annually since 1990,according to data compiled by Bloomberg.
"We don't believe that it's in the interests of OPEC,notably Saudi Arabia, to allow a prolonged period of lower oilprices," Harry Tchilinguirian, the head of commodity marketsstrategy at BNP Paribas, said by e-mail on Sept. 29.
BNP Paribas, UBS and Barclays said they expect additionalcrude-production cuts this year. A surplus of about 400,000 to500,000 barrels a day needs to be eliminated, Miswin Mahesh, ananalyst at Barclays Plc in London, said by phone on Sept. 26.
OPEC pumped 30.9 million barrels a day in September,according to a Bloomberg News survey of oil companies, producersand analysts. That's 750,000 barrels a day more than the group'sown estimate of how much oil the world needs from it in thefourth quarter.
There may be additional Saudi output curbs, or supplies maytighten because of a "relapse" in fellow OPEC members Iraq orLibya, Mahesh said.
The U.S. and its allies are bombing targets in Syria andIraq, OPEC's second-biggest producer, to repel Islamic Statemilitants who have seized a swath of territory. The conflict haslargely spared southern Iraq, which the EIA says is home toabout three-quarters of the country's oil output.
Libya, the holder of Africa's biggest oil reserves, isdivided politically as its internationally recognized governmentshifted to Tobruk and a different administration controls thecapital, Tripoli. The nation's production, currently at about900,000 barrels a day, was disrupted last month by protests atthe Gialo field and a rocket attack that damaged the Zawiyarefinery, according to Mohamed Elharari, a spokesman at NationalOil Corp.
"We need to see that balancing come from the supply side,it just remains to be seen what shape it takes" said Mahesh atBarclays. "The biggest factor there is whether the OPEC cutsare going to be voluntary, or whether it's going to be arelapse."