Barclays cuts oil price forecasts ahead of OPEC meeting

Barclays has cut its forecasts for Brent crude and West Texas Intermediate ahead of the Organization of the Petroleum Exporting Countries’ two-day meeting, which it expects to be a “non-event”.

The bank said member countries are unlikely to agree on any production cuts, meaning oil prices will remain weaker.

“Though OPEC gets passing grades on the slowdown in non-OPEC supply, the global demand acceleration, and a higher market share, its revenue challenge will mount next year when some previously disrupted supply returns,” it said.

Barclays cut its Brent and WTI price forecasts by $3 to $60 and $56 per barrel, respectively. The bank said its market balances have loosened over the past two months and prices are ending the fourth quarter slightly lower than its September forecast.

“Though starting from a lower base price level in December, we continue to expect fundamental supply drivers to tighten the market balance, bringing global supply and demand in line by the fourth quarter 2016 and bringing Brent back to $65 in the second half 2016.”

The bank said OPEC lacks a credible path to a cut and the Secretariat is unlikely to address the hard questions on Iran, Iraq and Libya.

It pointed out that previous efforts to design a fair and equitable system of allocating quotas based on various metrics have eventually failed.