Rystad Maintains Bullish Stance

Rystad Energy is maintaining its “bullish stance” for the second half of this year and first half of 2020, according to Bjornar Tonhaugen, the company’s head of oil market research.

“We retain our bullish stance for the second half of 2019 and first half of 2020 as we anticipate OPEC+ to extend production cuts through 2019, while we also expect bullish oil market effects due to the introduction of IMO 2020 regulations on sulfur content in marine fuels,” Tonhaugen said in a statement sent to Rigzone on Thursday.

The Rystad Energy representative added, however, that the effects of the IMO 2020 “scramble” will likely be “short-lived”.

“By 2021 there will be renewed pressure on Saudi Arabia and OPEC+ to cut production again or risk a new down-cycle in oil prices,” Tonhaugen stated.

“We tentatively expect a correction in prices, possibly already from the second half of 2020 and into 2021, as the IMO effect fades,” the Rystad Energy head added.

“Nevertheless, the biggest issue is the ability of the U.S. shale industry to grow by 1.4 million barrels per day annually between 2020 and 2025 in our current base case, which is enough to keep up with global demand, causing a recurring dilemma for Saudi Arabia and OPEC,” Tonhaugen continued.

Last month, Hootan Yazhari, head of global frontier markets equity research at Bank of America Merrill Lynch, revealed in a television interview with Bloomberg that Merill Lynch expects oil to rally into the summer.

“We think a number of factors will see the oil market tighten in the coming months and, as a result, as we head into the summer we should expect oil prices to have a seven-handle, maybe even higher depending on a number of other factors,” Yazhari told Bloomberg in the interview.

Back in March, analysts at Fitch Solutions Macro Research lowered their average annual price forecast for Brent for 2019.