Consumers can expect at least another two years of low oil prices, a Reuters poll showed on Thursday, recording its biggest downgrade to forecasts since the global economic crisis.
Oil prices have dropped by a quarter since June, taking benchmark North Sea Brent crude oil down to around $87 (R952) a barrel as overproduction and lacklustre demand have filled stockpiles around the world.
A massive increase in high quality oil production from North American shale has swamped demand at a time of sluggish economic growth and analysts say the glut could last for years.
Reuters monthly poll of 31 economists and analysts said Brent was likely to stay below $100 a barrel for the next two years, averaging $93.70 in 2015 and $96.00 in 2016.
That is $9.60 a barrel below the average forecast in the last Reuters poll in September and the biggest monthly cut in forecasts for year-ahead oil prices since November 2008, when the world was in the depths of the global financial crisis.
Twenty four of the 26 analysts who contributed to data for both the September and October Reuters polls slashed their forecasts, some substantially.
Goldman Sachs, which said before the crash of 2008 that oil could hit $200 a barrel, cut $15 a barrel off its forecast for the first quarter of next year, expecting Brent to drop to $85.
The US bank now has one of the lowest forecasts for next year, projecting Brent at an average of just $83.80 as new US shale oil production keeps the market over-supplied.
Goldman Sachs and other analysts say the ability of the Organization of the Petroleum Exporting Countries, which pumps around a third of the world's crude oil, to influence prices has been eroded by the new shale oil production.
But what is bad for oil producers, is good for consumers.
Oil has a huge impact on transport and manufacturing costs and falling oil prices reduce inflationary pressure worldwide.
“Cheaper oil is very good news for the world economy and consumers in the United States,” said Torbjorn Kjus, senior oil analyst at Norway's DNB Markets.
“Although it is bad for oil producers such as Norway, the rest of the world will benefit.”
DNB Markets in Oslo had the lowest Brent forecast, looking for an average of $80 a barrel next year and said oil could fall much further:
“Prices could drop even lower than this average as there will be delays to the curbing of production,” Kjus said.
Thomas Pugh, commodities economist at Capital Economics, one of the most consistently bearish of all forecasters this year, said a $10 a barrel fall in the world oil prices could boost global GDP growth by 0.2-0.3 percentage points.
“That is good news for most of us and a huge bonus for motorists,” said Pugh, who has forecast since January that Brent will average $85 in 2015.
The Reuters poll forecast US light, sweet crude, also known as West Texas Intermediate or WTI, would average $88.00 a barrel next year.
The previous month's consensus was $96.10.
WTI has averaged $98.19 so far this year.
Brent, buoyed by much higher prices in the first half of this year, has averaged $105.15 so far in 2014.
Analysts gave a wide range of forecasts, between $50 and $110 a barrel, when asked about the break-even price for US shale oil, a key factor in the oversupply in the market.
Brent's premium to WTI will narrow to $5.70 a barrel in 2015 from $10.58 last year, the poll showed.
ANZ and Standard Chartered had the highest 2015 Brent forecast, both predicting it would average $105 per barrel next year. - Reuters