Oil prices should recover in 2016, regardless of OPEC

Brent’s (short-lived) dip today below $40 per barrel is a further damning verdict on OPEC’s bungled communications after its meeting last Friday. However, it was never likely that the group would agree to cut output to boost prices. Instead, any recovery next year will depend on reductions in non-OPEC supply and on stronger demand. On this basis, while we are lowering our end-2016 forecast for Brent from $60 to $55, we continue to expect oil prices to stage a partial recovery next year.