adminCrude Oil Price Forecast: Brent Bid Ahead of OPEC Report and US CPI
Crude Oil Price Forecast: Brent Bid Ahead of OPEC Report and US CPI
Global crude prices remain volatile as many factors affect supply and demand, including the coronavirus pandemic, natural events, and limited oil production due to restrictions by OPEC and its partners. In addition, global oil demand is fueled by the U.S. economy and its high energy consumption.
In the US, demand is driven by domestic production and exports to China, which accounted for about half of all US oil consumption in 2022. However, the United States is experiencing a slower oil recovery than originally anticipated and the government has taken steps to reduce oil production, according to analysts.
The IEA expects world oil supply to increase by 1.2 million b/d in 2023, which will help balance supply and demand. This will be driven by non-OPEC countries, notably the United States, and E&Ps outside the OPEC-plus cartel, the agency said in its January Oil Market Report.
This is less than the 1.5 million b/d that Russia is projected to cut in output. The IEA said non-OPEC growth will still be below demand growth, leaving the global oil market vulnerable to any supply shocks that might occur.
Despite slowing demand, analysts have remained bullish on crude oil futures and expect them to average $92 per barrel in 2023 and $80 per barrel in 2024. The EIA has also projected oil prices will fall to $78 in 2024 as the world’s commercial crude inventories build.
In its report, ANZ sees Brent crude oil averaging $105/bbl in March, advancing to $115 in June and sliding to $110 in September. It then expects Brent to trade between the high-$95 mark and low-$80 in 2025.
Fitch Solutions Country Risk & Industry Research has released its latest commodity outlook report for the year and predicts Brent crude oil will average $95/bbl in 2023, falling to $88 in 2024 and then reverting back to $85 in 2025. It is also expected to stay at this level in 2026.
Analysts are not sure whether OPEC will be able to maintain its current policy of cutting output to prop up prices, and some say that the group could cut even more if it sees demand grow more than expected. Reuters spoke to several OPEC sources and found that three said oil may rebound to $100 in 2023, while two others predicted it would decline.
With a global recession still looming and concerns about the Chinese economy, the prospects for oil prices are not as strong as they were in June. But Saudi Arabia and other OPEC members continue to remain comfortable with oil at around $80 per barrel.
The IEA’s monthly Oil Market Report provides a comprehensive review of global oil demand, supply, and prices. It is widely read by governments, policy makers, market participants, strategic planners, academics and other stakeholders. It has become one of the most authoritative and timely sources of data, forecasts and analysis on the global oil market.