Morgan Stanley 2018 Oil Price Forecast


As we are approaching the end of the year soon, many of us like to sum up the results of the year and look into the future. Just like this, Morgan Stanley 2018 Oil Price Forecast has been released to give us an idea of what to expect from the oil market next year. Let’s discuss the outlook of this major bank.

8 November, AtoZForex Amid latest development on the Saudi side, the oil has got some ground. Besides, some other major financial institutions have been bullish on their projection, too. For instance, the World Bank and the International Energy Agency have shared their outlooks with the public.

Morgan Stanley 2018 Oil Price Forecast

Morgan Stanley now believes that the international benchmark Brent Crude will hit $62 in the Q4 of 2017. Previously, the bank’s projection stood at $55. Meanwhile, according to the Morgan Stanley 2020 oil price forecast, the US West Texas Intermediate will average at $56 in the last quarter of the year, up from the previous projection of $48.

Moreover, the bank stated that it sees the Brent averaging $63 and WTI at $58 by the Q2 2018. The bank is concerned with the rising demand for the US shale crude since it is uncertain whether US drillers can deliver on it.

The hunger for oil is increasing at a rapid pace, which leads to the drip in the US crude inventories. According to Morgan Stanley analysts, OPEC and other oil nations are most likely to extend their oil cut deal through the next year.

Will the US meet 2018 US shale demand?

Following on this, outside of OPEC, there is a little advancement in oil supplies. However, even in the US, the number of oil rigs has been on a decline.

In order to balance the oil market, the US shale drillers will need to push production from about 5.9 million barrels per day this year to 7 million barrels per day in 2018. Morgan Stanley also sees that this would require drillers to start involving an average of nine rigs each month. Yet, the major bank is not that sure this can happen. The analysts with the bank wrote in a note:

“Right when the world’s reliance on shale is growing, its limits are starting to become apparent, and there seem to be two aspects to this: ability and willingness.”

Meanwhile, the costs for oilfield services are also on the rise. Drillers are reluctant to risk and fund growth at this time, according to the bank’s research.

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