UBS and Nomura cut oil price forecasts

Equity analysts at Nomura lowered their oil macro price assumptions for 2016 reflecting a decreased probability that the Organisation for Petroleum Exporting Countries will cut its production.

The brokerage believes Saudi Arabia’s stance would remain unchanged given the oil kingdom’s desire to maintain market share in the context of Iran and its willingness to tolerate oil prices in the range of $50-$60 a barrel on a two to three year view.

“A lack of unity among OPEC members makes a constructive outcome from any emergency meeting unlikely, and points to a difficult backdrop ahead of the next [OPEC] meeting on 4 December,” Nomura analyst Theepan Johilingam said.

Meanwhile, analysts at UBS also cut their oil price forecast for fiscal year 2015 to $55 per barrel from $62 beforehand.

The bank’s long-term price forecast was brought down to $80 per barrel from $90.

“Near term recovery is expected to be stymied by continuing production surplus, the prospects of returning Iranian crude, likely tightening in the US and a China slowdown. Our cut to normalised reflects expectations of higher US production pushing the supply curve to the right & cost reduction & deflation continuing to work their way through,” UBS said.