Oil Market Update

Oil prices dropped by 60% from June 2014 to mid-January. The recent rebound in oil prices has been triggered by expectations that a falling number of rigs hired by the US shale industry and sharp cuts in oil companies' investment budgets will reduce the supply overhang of oil later in 2015 and in 2016.

Nordea Global Research notes in a report on Wednesday:

• Before we see clear signs that the physical supply/demand balance is tightening we assume that oil prices will remain volatile and under pressure. 
  
  
• We foresee an average Brent oil price at USD 62/b in 2015 and USD 75/barrel in 2016. 
  
  
• In the medium term the new oil order- moving from a dominating cartel to market share - will drive the market equilibrium price down from the 2011-13 average at around USD 110/barrel closer to the marginal cost around USD 85/barrel.