The Energy Report: Stephane, do you think the oil price has hit bottom and is now recovering?
Stephane Foucaud: When the Brent oil price was close to $50/barrel ($50/bbl), I think it was the bottom. It has recovered quite a bit. There is a risk that it might dip again, but I don’t think we will reach the low $50s for quite some time. The reason I think there is a risk that the oil price could dip is that there has been an overreaction to the North American rig fleet reports, and particularly to what appears to be a large number of rigs being taken out of the market. Those rigs are, however, associated with lower-producing areas. Therefore, I think it’s more sentiment than reality in terms of impact on the supply. The recovery has been too steep.
TER: What prices are you forecasting for 2015 and 2016?
SF: For 2015, we are anticipating $59/bbl Brent. For Q1/15, we have $54/bbl; Q2/15 at $58/bbl; we expect to end up at $63/bbl. For next year, we have $72/bbl. The trend on the one-year view is upward, but with some fluctuation.
TER: The Islamic State of Iraq and Syria (ISIS) is growing in Libya, and is threatening the oil industry there. How would capture of the oil fields by ISIS affect commodity prices?
SF: Though it is part of the equation, and Libya is a problem, production in Libya has already dropped a lot, and is arguably already factored into the oil price. I think the situation in Iraq and Kurdistan with regard to ISIS is equally, if not more, important. If you have deterioration of the situation in Kurdistan and Iraq, that will have a positive impact on the oil price. Now, that has to be considered in the context of Venezuela potentially blowing …read more