Steep declines in US rig count, downward revisions to IEA supply forecasts, a softer stance from OPEC on oil prices and a change in speculative positioning all indicate oil prices have bottomed.
Higher global growth and further consolidation on the supply side are set to support a recovery in oil prices this year - we view the 'new equilibrium' price for Brent crude as around USD70-80/bl.
We forecast Brent will recover to USD76/bl on average in Q4 (revised down from USD78/bl) and USD78/bl on average in 2016 (revised down from USD85/bl), which we expect to lead to a further recovery in prices of major oil products.
Overall, our forecasts for major oil products prices are above forward market prices - both in 2015 and 2016. We recommend consumers hedge expenses this year and next at the current low levels.
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