Societe Generale on Friday raised its 2018 and 2019 Brent crude price forecasts, citing stronger oil market fundamentals on the back of falling production from the Organization of the Petroleum Exporting Countries. "The declines in OPEC output, over and above their planned cuts, helps to cause large expected global stockdraws in second and third quarter, which should push Brent to an average of $80 in the third quarter," SocGen analysts wrote in a note.
Falling Venezuelan output, combined with a potential reduction in Iranian production due to looming US sanctions, could significantly lower OPEC production, SocGen said. OPEC and non-OPEC producers led by Russia have agreed to curb output by about 1.8 million barrels per day until the end of 2018 to reduce global stocks, and the inventory overhang is now near OPEC's target.
The French bank raised its 2018 Brent price forecast by $9.20 to $75.35 per barrel and its 2019 view by $7.75 to $72.75 a barrel. It also revised up its 2019 West Texas Intermediate price forecast by $6.75 to $67.75. Potentially higher OPEC and Russian production, and slightly weaker global demand growth will lead to a better-supplied market in 2019, the bank said, forecasting a moderate global stock build that could put some pressure on prices.