01/20/2015 02:31 EST | Updated 03/22/2015 05:59 EDT

Calgary Oil Analyst Offers Dim Outlook For 2015

FILE - In this July 26, 2011, file photo, a worker hangs from an oil derrick outside of Williston, N.D. Justin Kringstad, the director of the North Dakota Pipeline Authority said proposed increases of tar sands oil from Canada likely will not have an impact on the state's soaring oil production. Kringstad said refinery destinations for the two crudes may differ because heavy sour crude from Alberta's tar sands is of lower-value and more difficult to refine than North Dakota's light sweet crude. (AP Photo/Gregory Bull, File)
Veteran oil forecaster Martin King expects crude prices to fall further before a gradual increase later this year.

The FirstEnergy Capital commodity analyst provided an update on his forecast for oil this year during a presentation in downtown Calgary on Tuesday morning.

He said he expects the price of crude to average $54.50 US a barrel in 2015 and $67.20 in 2016.

King painted a bleak picture for oil producers, citing massive oversupply of oil around the globe. Onshore and offshore storage capacity is filling up and demand is subdued, especially in Asia, he said. 

At the same time, oil production keeps rising. OPEC is holding the line with output and production is expected to increase in the U.S.

"North America will blink first," said King.

Drilling activity in Canada and the U.S. is beginning to slow, which should cause oil production to start falling in 2016, he said.

Is $30 the bottom?

A gradual rebound in crude oil prices is expected by many industry watchers. But first, prices will have to bottom out.

That is expected to happen in the next few months.

"Of course, it could get lower. In fact, the options market in crude oil suggests that we could see prices as low as $30," said Adam Siemenski, administrator with the U.S. Energy Information Administration, speaking to CBC News in Calgary.

"Nobody really has a good handle on where all this is going. There are too many moving parts."