Citibank: Brent oil forecasts raised to $64 for 2019

Citibank analysts have revised their oil price forecasts as they expect OPEC+ to end cuts in 2H’19, with Brent averaging $64 in 1Q’19, & 4Q’19 averaging $67 under IMO 2020 pressures.

Key Quotes

“We see 2019 Brent averaging $64, revised up $2/bbl. However, we expect wide price realizations, with the possibility of $70 point prices at times in 1Q’19 & on. US pressure on S.Arabia & OPEC+ would likely resume if Brent prices exceed $70, while Russia looks increasingly reluctant to extend cuts much further.”

“With a return of barrels in 2H’19, this could begin to drive builds in late 2019 going into 2020, and make for a volumetrically weak 2020-21, keeping deferred prices under pressure. We also adjust our bull case, and assign it a high 30% probability.”

“Our bull case is for Brent to average $74 in 2019, hitting $80+ at times with OPEC+ holds cuts to year end. There could be further losses in supply, particularly in Iran & Venezuela. In our bear case (15% probab), we consider OPEC+ starting to raising oil production earlier than June, starting in April. S.Arabia could shift strategy from withholding production to raising output. Weaker demand could materialize after winter with macro downside risks. Supply could come back in Iran,or Libya. This could push prices to low $50s by 1H’20.”