In a BofA World Analysis report despatched to Rigzone this week, analysts revealed the place they see the oil worth heading within the close to and mid-term.
“Strong U.S. shale provide development, heat winter climate, extra renewables, and quick rate of interest hikes have compelled OPEC+ to pare again oil manufacturing for 18 months now to agency up crude markets, whilst geopolitics have turned extra complicated,” the analysts said within the report.
“What does this imply for oil costs? Whereas OPEC+ has proven it could possibly set a flooring of $70 per barrel, two elements may additionally assist cap oil under $100 per barrel: a rise in spare manufacturing capability to ~5 million barrels per day (on account of quantity cuts) and substantial non-OPEC+ provide development over the following few years,” they added.
“This implies oil costs ought to keep anchored near-term, probably permitting for some financial coverage easing in 2H24 and 2025. Thus, we reiterate our forecast that Brent will common $80 per barrel or so this 12 months and subsequent, down from $82 per barrel in 2023 and $99 per barrel in 2022,” they went on to state.
The analysts additionally famous within the BofA World Analysis report that, over the medium time period, “the image doesn’t change considerably”.
“As we projected in 2021 and 2022, we proceed to count on Brent costs to common $60 to $80 per barrel by means of 2029 so oil markets can keep balanced, up from the $50-70 per barrel vary we forecast throughout the 2016 to 2021 interval,” they added.
“What basic assumptions again our worth view? Following an enormous leap of two.3 million barrels per day in 2023 that would mark ‘peak oil demand development’, we see consumption up 1.3 million barrels per day in 2024,” they continued.
“Thereafter, demand for oil ought to embark on a slower development path into 2025 on structural vitality transition modifications to varied sectors, averaging 700,000 barrels per day in 2026-29 in our projections,” they went on to notice.
The analysts said within the BofA World Analysis report that “dramatic” oil worth strikes are nonetheless potential however mentioned this was “unlikely”.
In a separate report despatched to Rigzone on February 29, BMI, a Fitch Options firm, highlighted that Brent crude costs “continued to commerce sideways this week”.
“Brent at $83 per barrel has proven current power, though fundamentals stay tilted to oversupply,” BMI analysts mentioned in that report.
“Expectations of a continuation of OPEC+ manufacturing cuts into Q224 can be weighing on sentiment as comfortable demand is predicted to persist. The newest oil stock report from the U.S. signifies a stronger than anticipated construct in shares highlighting the imbalance in fundamentals,” they added.
“Nonetheless, timespreads for Brent futures contracts have widen[ed]. The transfer to stronger backwardation will likely be supportive of a extra bullish stance for costs as markets are pricing in tightening within the months forward,” they continued.
“We maintain to our present forecast for Brent crude to common $85 per barrel this 12 months, up from $82 per barrel in 2023,” they went on to state.
In a report despatched to Rigzone final week, Normal Chartered projected that the ICE Brent close by future worth will common $92 per barrel within the first quarter of this 12 months, $94 per barrel within the second quarter, $98 per barrel within the third quarter, and $106 per barrel within the fourth quarter. In that report, the corporate forecast that the commodity will common $109 per barrel in 2025, $128 per barrel in 2026, and $115 per barrel in 2027.
Based on the U.S. Power Info Administration’s (EIA) newest quick time period vitality outlook (STEO), which was launched on February 6, the group sees the Brent spot worth averaging $82.42 per barrel in 2024 and $79.48 per barrel in 2025.
To contact the creator, e-mail andreas.exarheas@rigzone.com