Brent Crude Oil is expected to trade range bound for the resto of 2014 with prices to average $108 per barrel in Q2, 2014.Barclays said in a weekly note that Q3 prices are expected to average $111/bl while Q4 average is expected to be $109/bbl.Along with summer demand and refineries returning from maintenance, the Brent July-August time spread is expected to be well supported given the 25-day maintenance announced for Buzzard (the UK’s largest oil field). The Forties Blend unstabilised crude oil is expected to fall to 196 thousand b/d in August from 407 thousand b/d in July, partly as a result of maintenance at Buzzard.

At the start of Q2, market expectations centred on a twist in oil market balances, easing away from a partly weather driven constructive Q1. The first leg of the twist was set to come from oil demand easing following weather driven extremities and the approaching of the shoulder season for refinery runs, especially in Asia. The second leg of the twist was expected to come from oil supplies recovering from unplanned outages.

These two factors were core to the view that a window of weakness for oil prices was developing in Q2. However, price action has so far been to the contrary. Brent prices in April are marginally higher than the $107.9/bbl averaged in Q1. Also, on the back of improved connectivity and healthy refinery runs, WTI has outperformed, averaging 3.8% higher than the Q1 average.
Source: Barclays