Barclays expects Brexit to weigh on oil markets, trims price forecasts

A worker walks up the stairs on the side of an oil tank at the Total refinery in Grandpuits, near Paris, January 6, 2015. REUTERS/Christian Hartmann

(Reuters) - Barclays lowered its crude price forecasts on Friday, citing reduced expectations for growth in the global economy and oil demand following Britain’s recent vote to leave the European Union.

While market participants saw limited impact on oil markets from the ‘Brexit’ vote, Barclays said it would be bearish for crude in the second half of the year.

The British bank trimmed its Brent and WTI price forecasts for 2016 by $3 each, to $44 and $43 a barrel.

Stressing that oil markets were “far from immune” to the effects of the British referendum, the bank said “markets have experienced only the tip of the iceberg in terms of the impact of the UK’s ‘leave’ vote.”

The British vote to leave the EU is expected to exacerbate a slowdown in growth of global oil demand, which was already sluggish before the referendum, the bank said.

“The slowdown in economic growth expectations will now accelerate the decline in oil demand growth expectations.”

The bank downgraded its global oil demand growth forecast from 1.2 million barrels per day to 1.1 million bpd in 2016, and from 1.3 million bpd to 1.2 million bpd in 2017.

Barclays expects Brent prices to rise to the $60-65 per barrel range on a modest deficit in the first half of 2017 before averaging $57 a barrel for the year.

A Reuters poll forecast that Brent crude will average $45.20 per barrel in 2016, up $1.60 from last month’s survey, and also the fourth straight upward revision in forecasts for the North Sea crude benchmark.

Reporting by Apeksha Nair in Bengaluru; Editing by Bernadette Baum