Norway's Biggest Bank Sees Crude Prices Doubling This Year

  • Brent supply-demand balance to improve on 2017 outlook: DNB
  • Says M&A most likely in offshore supply vessel, rig sectors

Oil will break its downward spiral and double in the second-half, according to DNB ASA, Norway’s biggest bank.

“The market will look into 2017 and they will see the supply-demand balance will be different,” Ottar Ertzeid, the head of DNB Markets, said in an interview at a conference in Oslo. “That will be the shift in the sentiment in the oil market, which can change quite rapidly.”

DNB, which keeps a close eye on crude as the biggest bank in western Europe’s biggest oil exporter, sees the price per barrel rising to $65 in the second half of this year after this week slumping to a 12-year low of below $28.

Brent crude fell 0.6 percent to 27.71 a barrel as of 1:31 p.m. in Oslo.

Brent capped a third annual loss in 2015 as the Organization of Petroleum Exporting Countries effectively abandoned output limits and is now being buffeted further amid concern over Chinese demand and a potential for larger exports out of Iran.

Norway’s oil-heavy stock exchange has slumped with the oil drop, with the OBX index down 23 percent from a high in 2015. That could trigger more deals, according to the markets chief.

“M&A is a possibility mostly in those sectors struggling the most from the low oil prices, which are the offshore supply vessel sector and also the rig sector, where you see financial restructurings going on,” Ertzeid said. “Such situations create possibility for those with fresh money to put that into the market.”

However, shareholders may have to endure more pain before the market improves.

“We are positive toward the stock market but we acknowledge that in the shorter term it will move along with oil prices,” Ertzeid said. “In the short-term it’s anybody’s guess how far will oil prices drop and where will the equity market bottom.”

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