HOUSTON — Raymond James said Monday that an oil price rebound doesn’t look likely in 2016, as international production continues to surge and demand growth looks shakier than ever.

Analysts at the financial services firm said that they lowered their projected U.S. oil price for next year to $55 per barrel, down $10 from the $65 per barrel oil target previously set. Raymond James’ 2015 U.S. crude forecast is for $50 oil.

“Oil market sentiment is currently as ugly as it’s been since January,” analysts wrote in a report, “The industry is set for a second straight year of painful austerity.”

The bleaker forecast comes as the three Middle Eastern nations of Iran, Saudi Arabia and Iraq have all boosted production. Simultaneously, a stock market crash in China and continued unease over Greece’s future in the Eurozone have trampled on the assumption that economic growth would snap up the extra crude on the market.

Saudi Arabia boosted its oil production to a record 10.24 million barrels per day in the second quarter of 2015, up about 470,000 barrels per day from the first quarter and 740,000 barrels per day in the same quarter last year, according to Raymond James figures.

“While Saudi Arabia cannot keep worsening the oil glut forever, as things stand we have to assume that its current production level will last at least through the end of 2016,” analysts wrote.

Iraq has also boosted its oil production and Iran is gearing up to sell its crude oil once again on the global market. Raymond James estimated that Iraq was producing about 4 million barrels per day currently, up from the about 3.33 million barrels per day on average in the second quarter of last year. Iranian crude oil could add as much as 600,000 additional barrels per day to the markets next year.

On the other side of the oil price equation, demand continues to look fragile thanks to issues surrounding the major oil consuming economies of the Eurozone and China. In Europe, analysts cautioned that Greece abandoning the Euro could threaten a recovery in demand in the short term. In China, analysts warned that the recent stock market swings could be signs of more fundamental economic flaws.

“The bottom line is that even a second straight year of ‘austerity on steroids’ would not result in a balanced market in 2016, but it would set the foundation for a balanced picture in 2017 and beyond,” analysts wrote.

Sourced from fuelfix.com August 11th, 2015.