Oil prices to peak in mid-2019: BofAML – Brent crude oil prices are expected to trend gradually higher, hitting an average of $80 per barrel (/bbl) by mid-2019 before gradually trending lower to an average of $71/bbl by end-2019 – Crude Oil prices peak 2019 BofAML - Arhive

This content has been archived. It may no longer be relevant

Crude Oil prices peak 2019 BofAML Crude Oil prices peak 2019 BofAML  Crude Oil prices peak 2019 BofAML  Crude Oil prices peak 2019 BofAML  Crude Oil prices peak 2019 BofAML  Crude Oil prices peak 2019 BofAML  Crude Oil prices peak 2019 BofAML  Crude Oil prices peak 2019 BofAML  

Oil prices to peak in mid-2019: BofAML

DUBAI

Crude Oil prices peak 2019 BofAML Brent crude oil prices are expected to trend gradually higher, hitting an average of $80 per barrel (/bbl) by mid-2019 before gradually trending lower to an average of $71/bbl by end-2019, said Bank of America Merrill Lynch (BofAML) in a new report.

This amounts to approximately a $20 appreciation in crude oil from the end of last year to the peak in the outlook, added BofA Merrill Lynch Global Research report “Liquid Insight”.

However, a sustained oil price shock where crude oil prices remain at peak would be significant.

“Our model simulations indicate a permanent oil price shock to $80/bbl would shave roughly 0.2ppt to growth over the next eight quarters while a sustained shock to $100/bbl would cut roughly 0.5ppt. Also note the economic literature finds that large movements in oil prices could have negative nonlinear effects on growth as consumers may be slow to adjust to higher energy prices,” the report said.

“However, given we are only forecasting a gradual rise in prices over the outlook, we do not expect a material slowdown in growth and maintain our current growth forecasts.”

The report said that the new outlook for oil prices will temporarily lift headline inflation, but have little to no effect on core inflation, which is expected to hit 1.9 per cent year-on-year (YoY) and 2.1 per cent YoY this year and next, respectively.

“Another reason we do not expect the rise in oil prices to materially impact our outlook is that the importance of oil shocks has diminished over time,” the report said.

“In the past, changes in oil prices were a major source of economic fluctuation. For example, oil price shocks of the 1970s led to bouts of stagflation (i.e., low growth, high unemployment, and high inflation). However, since the late 1990s, growth and inflation have remained relatively stable in the face of major oil shocks. We see several factors for this phenomenon.”

First, we now consume less energy goods than in the past. Consumption of gasoline, fuel oil and other energy goods as a share of total consumption has fallen from around 8 per cent before the 1970s to around 2.5 per cent today, limiting the effect of oil shocks. Second, the US produces more oil domestically, reducing our reliance on foreign production.

Production of crude petroleum and natural gas extraction has been surging since the mid-2000s. Therefore, a rise in oil prices today redirects more income between domestic consumers and producers rather than it did previously, cushioning some of the negative impact of an oil shock. Third, monetary policy credibility has improved over time.

Heightened risk

Higher oil prices are a key risk to the growth outlook, but at this stage, we maintain our view that growth will remain on target to hit 2.9 per cent this year and 2.4 per cent next year. Only a sustained pickup in oil prices is likely to weigh on the economy, which appears unlikely given our current forecast for oil prices.

Moreover, the likelihood that an oil shock will lead to recession appears low. Fiscal stimulus from tax cuts and the budget deal should buffer against any downturn. Moreover, structural changes to the economy should limit the impact. On inflation, the pass-through of oil shocks to core inflation appears fairly limited while headline inflation is likely to respond quickly. All this suggests the Fed should remain comfortable in its gradual hiking cycle and keep it on track to raise rates two more times this year.- TradeArabia News Service

Related Topics

-What is the perfect price for oil? – When it’s too high, consumers start freaking out and using less. When it’s too low, oil companies cut back operations and lay off thousands of workers – Perfect price crude oil

-The Regulations That Could Push Oil Up To $90 – International regulations on the fuels used in shipping could tighten the oil market and push prices up to $90 per barrel in the next two years – Regulations Push Crude Oil $90

-Morgan Stanley Sees Oil Climbing To $90 By 2020 – Forget Iran and OPEC. There’s another issue that will keep oil prices supported for the next two years, according to Morgan Stanley’s oil outlook – Morgan Stanley Crude Oil $90 2020

-Get ready for $100 a barrel oil and the conflict it represents – The geopolitical risk premium in oil has driven crude prices to nearly four-year highs and shows no signs of abating – $100 barrel crude oil

-Oil for $300. Is It Possible? – If major oil companies keep postponing the necessary investments, the next “huge supply shock” may bring the oil price up to $300 per barrel – Crude Oil $300 per barrel possible

-Oil eases as clock ticks down to Trump decision on Iran – Oil eased on Tuesday ahead of an announcement by U.S. President Donald Trump later in the day on whether the United States will reimpose sanctions on Iran, but the price held within sight of its highest in more than three years – Crude Oil Trump Iran

-Saudi Arabia Needs $88 Oil – Higher oil prices have provided a boost to the economies of oil-exporting nations such as Saudi Arabia – Saudi Arabia $88 Crude Oil

-BP says still sees oil at $50-$60/bbl in 2018 as shale output surges – BP expects benchmark oil prices to weaken in the second half of the year as U.S. shale production surges by up to 1.5 million barrels per day – BP crude oil $50 $60 barrel 2018 shale output

-Iran and the oil market – How Iran’s nuclear deal and a host of other factors are forging a new crude reality – Iran Crude Oil market

-Oil output cuts succeeded but future cloudy – There is a danger of Opec, non-Opec members exceeding their vision due to current rally in oil prices, energy expert says – Oil output cuts Opec nonOpec

-Who’s to blame for costly oil? Saudis, Russia and Trump himself – Rising oil prices are now the latest target in President Donald Trump’s cross-hairs. The nation’s tweeter-in-chief complained Friday about OPEC fueling – Blame costly oil Saudis Russia Trump

-Oil pulls back from gains; OPEC says glut nearly gone – Oil prices on Thursday hit highs not seen since 2014, built on the ongoing drawdowns in global supply and as Saudi Arabia looks to push prices higher, though U.S. crude gave back gains in the afternoon to finish lower – Crude Oil OPEC glut Saudi Arabia

-Escalating Middle East Tension Could Trigger Oil Prices To Hit $100 Per Barrel – Oil prices could soon soar to $100 per barrel amid growing fear about conflict in the Middle East, according to an oil analyst for CNBC – Oil Prices $100 Barrel

– IEA: OPEC Mission Near Completion as Oil Glut Vanishes – OPEC is on the verge of “mission accomplished” in its quest to clear the global oil glut that caused the worst industry downturn in a generation – IEA OPEC Crude Oil Glut

-Is Russia Cheating On The OPEC Deal? – After three months of steady output, Russia’s crude oil production increased in March to 10.97 million bpd, the highest level since April 2017, as the top two Russian companies boosted their production – Russia Cheating OPEC Deal

-Oil price crosses $70 amid Iran deal tensions – Oil prices rose as investors saw increasing possibility that the US could withdraw from the historic Iran nuclear deal – Crude Oil price dollars 70 Iran tensions

-Is $70 oil the new normal? – The global economy is poised to cope well even if oil prices will remain at around $70 per barrel throughout 2018, energy experts said – Dollars 70 barrel crude oil shale oil

-Will oil prices remain strong for the rest of the year? – The oil inventory trajectory anchors oil prices in the short term, and the cost of bringing on the marginal barrel of US tight oil supply serves as the medium-term anchor for prices – The oil inventory trajectory anchors oil prices in the short term, and the cost of bringing on the marginal barrel of US tight oil supply serves as the medium-term anchor for prices – Crude Oil prices

Crude Oil prices peak 2019 BofAML Crude Oil prices peak 2019 BofAML  Crude Oil prices peak 2019 BofAML  Crude Oil prices peak 2019 BofAML  Crude Oil prices peak 2019 BofAML  Crude Oil prices peak 2019 BofAML  Crude Oil prices peak 2019 BofAML  Crude Oil prices peak 2019 BofAML