SocGen lowers Brent and WTI oil price forecasts for 2016

Oil would be significantly lower than previously expected in 2016 after the Organisation of the Petroleum Exporting Countries eliminated its production target and with Iranian exports possibly returning to the market sooner than had been anticipated, analysts at SocGen said.

The broker also cited the resilience of US oil output and the reappearance of strong fears – especially in the first quarter of 2016 - about a ‘hard-landing’ in China and other emerging markets.

Analyst Michael Wittner lowered his forecast for the price of front month Brent oil futures from $53.75 per barrel to $42.50.

Wittner also took down his projection for prompt month West Texas Intermediate futures from $49.75 to $40.50 per barrel.

More specifically, and for each of the four quarters of 2016, the analyst expected Brent futures to trade at $35, $40, $45, and $50.

WTI was expected to trade at a $2 discount to Brent for each quarter.

“Even after our adjustments, our view is that the risks to the 2016 outlook are mainly to the downside.”