Oil prices expected at around $65-$70 through 2023

Long-term expectations for the average price of Brent crude remain anchored around $70 per barrel, close to the $72 average realized in 2018. (Reuters)
Updated 16 January 2019
0

Oil prices expected at around $65-$70 through 2023

  • Despite the recent slump in oil prices, forecasts have edged down by less than $5 per barrel compared with the last annual survey conducted at the start of 2018
  • Brent prices in 2019 are expected to average $65 per barrel, unchanged from surveys in 2016, 2017 and 2018

LONDON: Oil prices are expected to oscillate close to current levels well into the next decade, averaging around $65-$70 per barrel through 2023, according to an annual survey of energy professionals conducted by Reuters.
Despite the recent slump in oil prices, forecasts have edged down by less than $5 per barrel compared with the last annual survey conducted at the start of 2018, and have changed little over the last three years.
Long-term expectations for the average price of Brent crude remain anchored around $70 per barrel, close to the $72 average realized in 2018.
The results are based on the responses from just over 1,000 energy market professionals to a poll conducted between Jan. 8 and Jan. 11.
Brent prices in 2019 are expected to average $65 per barrel, unchanged from surveys in 2016, 2017 and 2018.
In 2020, Brent is also expected to average $65 per barrel, revised down by $5 or less compared with prior surveys.
Far fewer respondents now see any risk of prices spiking to $100 or more by the end of the decade as a surge in US shale output has eased fears of supply shortages.
The proportion of respondents expecting prices to average more than $90 in 2020 has fallen to just 3 percent this year, from 13 percent at the time of the 2016 survey.
By 2023, prices are still expected to average $70, with most forecasts between $60 and $80, which suggests most energy professionals think there will be enough production developed at this level to meet consumption growth.
Among survey respondents, 26 percent are involved directly in oil and gas production (exploration, drilling, production, refining, marketing and field services).
Most of the rest work in banking and finance (18 percent), research (9 percent), professional services (9 percent), hedge funds (8 percent) and physical commodity trading (6 percent).
The results from respondents involved directly in the oil and gas industry were similar to those in other sectors.
Oil and gas insiders and those outside the industry have more or less the same outlook for prices in 2019 and 2020.
Insiders are marginally more bullish than outsiders on prices, but the difference is just $1.50 per barrel in 2019, rising to $3.50 by 2023.
Respondents exhibit more certainty about prices this year and next compared with subsequent years, which is natural given that uncertainty tends to increase over longer-time horizons.
Responses for 2019-2020 are tightly clustered, while expectations for 2021-2023 exhibit more variation. Even so, few respondents expect average prices to fall below $55 or rise above $85 in the next five years.
The level of uncertainty, as measured by the standard deviation of responses, has remained constant over the last four surveys.
Short-term uncertainty has remained little changed, with the standard deviation of responses for the first forecast year at $8 in 2019, compared with $7 in 2018, $6 in 2017 and $8 in 2016.
Long-term uncertainty has also held constant, with the standard deviation of forecasts for the fifth year at $19 in 2019, compared with $18 in 2018, $18 in 2017 and $20 in 2016.
There is no significant difference between oil and gas industry insiders and outsiders, with the level of uncertainty similar in both groups for both short-term and long-term prices.
Overall, most respondents expect the oil market to remain comfortably supplied in the foreseeable future, with prices oscillating around the current level or a little higher and relatively moderate volatility.


Russian court jails US investor pending fraud trial

Updated 16 February 2019
0

Russian court jails US investor pending fraud trial

MOSCOW: A Russian court on Saturday jailed the US founder of a major investment firm for two months over fraud charges he says were fabricated for use in a shareholder battle.
Michael Calvey, founder of the multi-billion-dollar investment fund Baring Vostok Capital Partners (BVCP), was placed under arrest until April 13 as he and five others await trial on charges they embezzled 2.5 billion rubles ($37.7 million).
Authorities detained four BVCP employees on Friday, including French national Phillipe Delpal.
Two other suspects include a former fund employee and someone at another firm mentioned in the probe. All six are now under pre-trial arrest.
In a statement Saturday, Baring Vostok said the claims made against its employees “have no merit.”
The case has already drawn comparisons to other high-profile probes against foreign investors in Russia, notably one against Bill Browder and the Hermitage Capital fund.
Ironically, it comes as Russia hosts a high-profile investment forum in its Black Sea city Sochi.
Calvey says he is innocent and argued in court that the probe is a bid to exert pressure on him amid a shareholder conflict within Vostochniy Bank, which he is trying to resolve in a London arbitration court.
The charges against him are intended to “pressure Baring Vostok to drop its arbitration claims in London or to obstruct the new share emission of Vostochniy Bank,” Calvey alleged according to a statement by Baring Vostok on Saturday.
Investigators say that a firm controlled by Calvey in 2017 owed 2.5 billion rubles to Vostochniy bank and paid the debt with a 59.9 percent stake in the Luxembourg company International Financial Technology Group (IFTG), which was valued at three billion rubles.
The investigators claim that IFTG’s real value was only 600,000 rubles.
The fraud claim against Calvey was filed with the FSB security service this month by Sherzod Yusupov, a minority shareholder in Vostochniy Bank, Russian agencies reported.
Baring Vostok controls more than 52 percent of Vostochniy Bank, while 32 percent is owned by Artyom Avetisyan, Russian reports said.
Calvey said in court that he and Avetisyan are tangled in a shareholder dispute, and that by filing the claim Yusupov was in fact acting on Avetisyan’s behalf.
BVCP is a veteran investor in Russia, with current and past projects that include the Internet company Yandex, online retailer Ozon.ru, several drugstore and food store chains, and Russia’s leading online classifieds service Avito.
Some Russian officials have supported Calvey, with Rosnano board chairman Anatoly Chubais calling him “one of the most respected investors” whose efforts “attracted about four billion dollars in foreign direct investment to Russia.”