Mubasher: Oil markets are expected to rebalance in 2017, according to a report released on Saturday by Qatar National Bank (QNB).
QNB Economics noted that oil prices started the year falling to $28 per barrel (pb) before recovering to around $50 pb by mid-2016.
The bank expected prices to average $44.7 pb in 2016; higher than its forecasts of $40.8 pb, and projected the average price to reach $55 in 2017, up from a previous forecast of $51.3 pb.
QNB believes that rebalancing in the oil market has been stronger than expected as the International Energy Agency (IEA) expects global demand growth to reach 1.4 million barrels per day (b/d) in 2016, up from their previous forecast of 1.2 million b/d.
The strong demand growth is triggered by emerging markets, especially China and the rest of emerging Asia.
Regarding the supply, high-cost oil producers in the US have been steadily reducing their output since April 2015. The IEA expects US production to fall by 0.5m b/d in 2016.
QNB expects the increase in supply to be moderate and the over-supply in the market is expected to be reduced to 0.4 million b/d due to the strong demand growth, leading to oil prices averaging $44.7 pb in 2016.
Meanwhile, supply expected to reach 1.3 million b/d in 2017.
