Fitch's FMI's BMI Research said in a report on Thursday (November 2) that Brent crude oil is bullish on the fundamentals in the longer term as supply and demand fabrics will tighten in 2019.
On Friday (November 3), the Brent crude futures rose 0.3% to US$60.80 a barrel, up about 37% from the June low of 2017, due to the OPEC-led production cutdown order. The market tightened and increased market confidence.
BMI expects that the market will return to the natural supply shortage after 2019. It is estimated that Brent crude oil prices will average $63 per barrel in 2019, $70 in 2020, and $72 in 2021.
BMI pointed out that OPEC's arguments and market positions have shown that the production reduction agreement will be postponed to the end of 2018. In addition, the year-on-year growth of US shale oil in 2018 is expected to be 220,000 barrels per day, which is lower than market expectations.
On the demand side, the agency pointed out that the macroeconomic backgrounds of emerging and developed markets remain strong, and fuel demand continues to strengthen, albeit at a slower pace. In the five years ending this year to 2022, net fuel consumption will increase by 5.9 million barrels per day, while consumption growth in the first five years of 2017 will be 6.1 million barrels per day.
BMI added, “In the short-term, Brent crude oil's narrowing of the WTI crude oil premium will put pressure on the former price, but OPEC and non-OPEC production cuts will support oil price increases by 2018.†The agency maintains Brent crude oil in 2018. The price is estimated to be around $57 per barrel.
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