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BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
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Oil report predicts bullish fourth quarter

04 Oct 2017 14:35 GMT

Report takes a look at the key factors set to affect oil prices over the next three months.



Denmark-based A/S Global Risk Management has published its oil report for the fourth quarter of 2017, which looks at the key factors that are set to affect oil prices over the next three months.

In the report, entitled: 'The Oil Market Quarterly Outlook Oct 17', the company notes: "The global fundamental balance has been shifting. Increasing production in the U.S., Libya and Nigeria have partly offset the current oil production cut agreement between OPEC and a row of non-OPEC oil producers. On the other hand, global oil demand is increasing as OECD countries, China and India continue to see positive growth rates.

"The geopolitical risk premium is up as both the Middle East and North Korea tensions loom. Venezuela faces severe economic difficulties which spill over to the oil production in the country."

Overall, Global Risk expects oil prices to increase in the fourth quarter, but suggests the "dark horses" are the potential ramping up of U.S. shale oil production - which will be bearish for oil prices - and bullish geopolitical tensions possibly affecting oil output.

The Global Oil Strength Index (GOSI)

The Global Oil Strength Index, or GOSI, was introduced by Global Risk in 2010. The GOSI is a single number between 0 and 100 that signals the company's expectations for the development of oil prices. A reading below 50 indicates a declining trend and above 50 an increasing trend.

Global Risk calculates the GOSI by assigning a strength rating or index for each of three factors - fundamentals, financials and geopolitics (defined below) - and then calculating a weighted average based on the three strength ratings.

- Fundamentals - covering the supply and demand balance.

- Financials - covering speculators' interest and the development of the financial market.

- Geopolitics - covering the situation in unstable oil producing regions of the world.

Fundamentals: Oct 2017 - Rating: 52 (+2 vs July 2017). Global Risk says: "Supply/demand situation is starting to look more balanced."

Financials: Oct 2017 - Rating: 50 (+1 vs July 2017). Global Risk says: "Continued OECD growth and stronger economic situation in the U.S. improving takes Financials from recent below 50 level to neutral."

Geopolitics: Oct 2017 - Rating: 60 (same vs July 2017). Global Risk says: "Increased geopolitical tensions around the globe increases risk of oil supply disruptions. Kurdistan, Venezuela and North Korea likely being the main risk drivers."

GOSI - Rating: 57 (+2 vs July 2017). GOSI is above the 50 level - indicating that the oil price expectation is bullish.

Average price forecasts (by Global Risk Management):

Brent Crude (US$ per barrel)

Q4 2017 - 54
Q1 2018 - 56
Q2 2018 - 55
Q3 2018 - 57

3.5% Rotterdam Barges (US$ per tonne)

Q4 2017 - 298
Q1 2018 - 310
Q2 2018 - 302
Q3 2018 - 313

0.1% CIF NWE Cargoes (US$ per tonne)

Q4 2017 - 495
Q1 2018 - 508
Q2 2018 - 503
Q3 2018 - 520

380 cSt Singapore Cargoes (US$ per tonne)

Q4 2017 - 311
Q1 2018 - 321
Q2 2018 - 311
Q3 2018 - 322

0.05% Singapore Gasoil (US$ per tonne)

Q4 2017 - 484
Q1 2018 - 503
Q2 2018 - 495
Q3 2018 - 510

US Gulf HSFO (US$ per tonne)

Q4 2017 - 298
Q1 2018 - 311
Q2 2018 - 303
Q3 2018 - 314

N2 Heating Oil (US$ per tonne)

Q4 2017 - 544
Q1 2018 - 551
Q2 2018 - 536
Q3 2018 - 544

To view the full report, please click here.






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