Oil price forecast in $50-$60 per barrel range, says KPMG

Muscat: Majority of oil and gas companies expect the current oil price between $50 and $60 per barrel as an indicator of the new market equilibrium for the foreseeable future, said KPMG in a note.
A major oil trader indicated that a further increase in the short term may be possible, given that a lot of supply was taken off the market by oil companies not making planned investments over $1 trillion since the price collapsed.
“Experts predict that oil companies will cut their investments in upstream on new oil fields by more than 20 per cent by 2020, compared with the level forecast until the drop in oil prices. This could noticeably reduce oil supply in the market by the end of the decade,” added the KPMG statement.
Currently, many market investors and players have tried to understand the trends in the industry, taking into account controversial data from the different parts of the globe. The recent talks on the potential extension to the production cut deal with the Organisation of Petroleum Exporting Countries (Opec) may also lead to an increase in oil prices in the mid-term. This deal has resulted in the pullback of around 1.2 million barrels per day of production generated by Opec countries and approximately half of that figure by non-Opec parties already.
At the same time, one should not overlook that the recent rebound in production in Libya and Nigeria (both exempt from Opec’s November deal to curb output), which could somehow impact the stock, thus, leading to oil price fixing near the forecasted bottom line.
The ninth five year plan in Oman is based on an oil price of $45-$60 per barrel and the forecast is above the assumed price, which is a good news, Ashok Hariharan, partner and head of tax, KPMG Lower Gulf, told the Times of Oman. According to the ninth five year plan, the assumed average price of Oman Crude is at $45 in 2016, $55 in 2017 and 2018 and $60 per barrel in 2019 and 2020.
“However, it is not sufficient to achieve break-even. With the current price of $55 a barrel, there will be a budget deficit,” added Hariharan.
The average daily production during the five-year plan is estimated at 990,000 barrels.