CREDIT SUISSE: Oil still hasn't hit bottom
In the note, simply titled "Oil Price Forecast Downgrade," the bank has become the latest to cut its forecast for the price of oil, and predicted that "the bottom is not yet in."
CS has brought down its expectations for crude to $30 per barrel in the first quarter of the year, and to just $38 per barrel by the end of 2016, a cut of 33% from previous estimations.
A couple of weeks back, fellow CS analyst Helen Haworth put out a note arguing that market sentiment is currently firmly set in panic mode, and that panic - the worst in markets since the peak of the Greek debt crisis in late 2011 - is a big part of the problem, the bank says.
Here's Credit Suisse on why they've cut forecasts (emphasis ours):
The price of oil has plunged by 75% since the summer of 2014, thanks to a massive supply glut in the market, largely due to OPEC's refusal to lower production rates. Last week, prices briefly fell to less than $27 per barrel, but have since risen back above $30. At lunchtime in Europe, Brent, the European benchmark is at $31.50, while West Texas Intermediate is at $30.50.
Oil's continuing crash has led loads of big banks, including Bank of America Merrill Lynch, Barclays, HSBC, and Citi, to cut their price predictions on oil this year.
Despite cutting forecasts, Credit Suisse aren't totally downbeat on oil, and its analysts predict that even in the most bearish scenario - which includes a global downturn, and increased supply by OPEC - oil will recover to at least $60 per barrel by 2018, allowing the US shale oil industry to expand. Here's the chart:
CS also expects the fundamentals of the oil market to "rebalance" by the middle of 2016, including an end to the supply glut which has plagued oil for the past few years. Here's Credit Suisse again (emphasis ours):