Equity and commodity markets have bounced back strongly this week after last weeks surprise Brexit vote sent shock waves through markets around the world. However, when it comes to the oil market, Barclays is not quite ready to dismiss the long-term impact of the Brexit.
The slowdown in economic growth expectations will now accelerate the decline in oil demand growth expectations, the firm said on Friday.
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Barclays believes the oil market will certainly feel the impact of the Brexit in the second half of the year. The firm has lowered its 2016 price forecast for WTI from $46 to $43/bbl and for Brent from $47 to $44/bbl.
In addition to lowering its price forecasts, Barclays also dropped its global oil demand growth estimates from 1.2 million bpd to 1.1 million bpd in 2016 and from 1.3 million bpd to 1.2 million bpd in 2017.
Looking ahead to 2017, Barclays is now estimating that Brent oil prices will peak in the $6065/bbl range in the first half of the year and average $57/bbl by years end.
The most recent Reuters poll predicts that Brent will average $45.20/bbl in 2016, up $1.60/bbl in the past month alone.
So far this year, The United States Oil Fund LP (ETF) (NYSE:USO) is up 5.2 percent.
Disclosure: The author holds no position in the stocks mentioned.
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