Quarterly Oil Market Update (Q3 2014)

In Q3 2014 oil prices dropped by 7.3 percent to an average of $102 per barrel. We believe this was due to a combination of accelerating US supply, weaker than expected global demand, stabilization in geopolitics, and an appreciation of the dollar. Oil prices will recover slightly in Q4 2014 but ample supply from non-OPEC sources will prevent prices from rising too far beyond $100 per barrel, unless there is a significant deterioration in geopolitics in Iraq, Libya or Russia/Ukraine. We expect Saudi production to 9.5 mbpd in Q4 2014, resulting in 9.7 mbpd average for 2014. In 2015, as the global economy recovers and oil demand picks up, we see Saudi production averaging 9.6 mbpd.