NEW YORK, Oct 21 (Reuters) - Standard Chartered Bank oil analyst Paul Horsnell, renowned for having called the market's long rally a decade ago, is back, and sticking with a more bullish bias even as prices slump to four-year lows.
On Tuesday, Horsnell and his team pared their forecast for 2015 Brent crude oil prices by $5 to $105 a barrel, still near the top of the league tables after a wave of reductions in bank forecasts over the past few weeks.
They said OPEC would have to cut production by some 1 million barrels per day (bpd) in order to prevent a rise in global stockpiles in the first quarter of next year, and that U.S. tight oil supplies would set a floor for prices, with some drilling already endangered by sub-$80 wellhead prices.
"Media coverage of the oil market is currently dominated by the characterization of a price war being conducted during a supply glut," they wrote in one of the first publicly released research notes since Horsnell joined Standard Chartered (HKSE: 2888.HK - news) in late 2013. He had previously worked for Barclays (LSE: BARC.L - news) .
"We disagree with this characterization. According to our supply and demand tabulations and those of the main agencies, there is no immediate oil glut."
The analysts said that while there was no excess of supply in the fourth quarter, one would emerge in the first quarter of 2015 that would require the Organization of the Petroleum Exporting Countries (OPEC) to take oil off the market. The cartel is due to meet Nov. 27, and several leading members have already said they see no need to curb supply.
"With more than five weeks of potential planning and negotiation to go before the OPEC meeting, in our view it would be unwise in a base case to assume that OPEC will fail to take a significant amount of oil off the market for Q1," they wrote.
The analysts also rejected the notion of a "price war" by Saudi Arabia, which they said would require an increase in production and a drop in prices to below commercial levels. Neither of these things have occurred, they said.
Moves by the world's top exporter to trim its monthly prices have been seen by some as a battle for market share in Asia, while its reluctance to curb output even as oil prices tumble toward $80 has been viewed as an effort to slow the growth of U.S. shale oil production, which has surged in recent years.
"Current prices and credit conditions for the tight oil industry are such that drilling levels are likely to be compromised and plans delayed unless prices rapidly rise by at least another $5 a barrel, to take tight oil wellhead prices back above $80 a barrel," the Standard Chartered analysts wrote. (Reporting by Jonathan Leff; Editing by Jonathan Oatis)