The U.S. Power Data Administration (EIA) and BMI, a Fitch Options firm, have revealed their newest Brent oil value forecasts.
In keeping with the EIA’s newest brief time period power outlook (STEO), which was launched on February 6, the group sees the Brent spot value averaging $82.42 per barrel in 2024 and $79.48 per barrel in 2025. In its earlier STEO, which was launched in January, the EIA projected that the Brent spot value would common $82.49 per barrel this 12 months and $79.48 per barrel subsequent 12 months.
The EIA forecast within the report that the common Brent spot value can be $82.66 per barrel within the first quarter of 2024, $84.03 per barrel within the second quarter, $82 per barrel within the third quarter, and $81 per barrel in each the fourth quarter of this 12 months and first quarter of 2025. The group projected within the report that the commodity would common $80 per barrel within the second quarter of subsequent 12 months, $79 per barrel within the third quarter, and $78 per barrel within the fourth quarter.
In its earlier STEO, the EIA noticed the Brent spot value averaging $82.97 per barrel within the first quarter of 2024, $84.03 per barrel within the second quarter, $82 per barrel within the third quarter, and $81 per barrel within the fourth quarter of this 12 months and first quarter of subsequent 12 months. In that STEO, the EIA additionally projected that the Brent spot value would common $80 per barrel within the second quarter of 2025, $79 per barrel within the third quarter, and $78 per barrel within the fourth quarter.
The EIA highlighted in its February STEO that the Brent crude oil spot value averaged $80 per barrel in January, which it famous is a rise of $2 per barrel from December and “the primary month-to-month improve within the crude oil value since September 2023”.
“Costs rose primarily due to heightened uncertainty about world oil shipments as assaults to vessels across the essential Purple Sea delivery channel intensified,” the EIA mentioned within the STEO.
“The Purple Sea is extra essential to the flexibleness of world oil commerce than in years previous following Russia’s full-scale invasion of Ukraine. These assaults have elevated each transit occasions and delivery prices for oil, limiting the flexibleness of the oil market to regulate to any future provide disruptions,” it added.
“The assaults additionally add a threat premium to costs because of the potential that oil manufacturing within the Center East may very well be shut in in the course of the forecast interval, though no oil manufacturing has been misplaced as of February 6,” it continued.
The EIA mentioned within the STEO that the influence of the Purple Sea assaults on oil costs has been restricted due to extended world oil stock accumulation throughout 2022 and 2023 and the dearth of disruptions to grease manufacturing.
“Our present evaluation is that world oil inventories elevated by 0.8 million barrels per day on common from October 2023, the month earlier than the Purple Sea assaults started, via January 2024 and by a median of 0.7 million barrels per day for all of 2023,” the EIA mentioned within the report.
“We count on that OPEC+ manufacturing cuts will result in world oil stock withdrawals throughout February and March, leading to a median draw of 0.8 million barrels per day in 1Q24, which we count on will put upward strain on oil costs within the coming months,” it added.
“After a interval of comparatively balanced markets throughout the remainder of 2024, we forecast the market will step by step return to average stock builds in 2025 as slowing progress in oil demand is once more outpaced by rising oil manufacturing progress,” the EIA continued.
“We forecast that world oil inventories will improve by a median of 0.1 million barrels per day within the closing three quarters of 2024 and by a median of virtually 0.5 million barrels per day in 2025,” it went on to state.
In a report despatched to Rigzone this week, BMI projected that the Brent value will common $85 per barrel this 12 months, $84 per barrel in 2025, and $81 per barrel in 2026, 2027, and 2028. A Bloomberg Consensus included within the report forecast that the commodity will common $83 per barrel in 2024, $80 per barrel in 2025 and 2026, $74 per barrel in 2027, and $88 per barrel in 2028. BMI is a contributor to the Bloomberg Consensus, the corporate highlighted within the report.
“We’ve got left our Brent crude oil value forecast unchanged this month, at a median of $85 per barrel in 2024, falling to $84 per barrel in 2025,” BMI analysts famous within the report.
“Costs have carried out comparatively effectively within the 12 months up to now, averaging over $79 per barrel throughout January, supported by elevated threat premia stemming from the Center East. The provision facet was a typically bullish issue for Brent, as a result of scheduled cuts by OPEC+ and unplanned outages in Libya and the USA,” they added.
“This helped to offset some bearish macroeconomic knowledge releases in main markets together with Mainland China and the eurozone, which raised considerations for demand. Our present forecasts counsel that the market will stay broadly balanced over the course of the 12 months, fostering a average 3.4 % 12 months on 12 months acquire within the oil value,” they continued.
The analysts warned within the report that they see dangers to the outlook each to the upside and the draw back, “as a result of appreciable uncertainties surrounding the energy of the worldwide financial system, the fallout from the unfolding Purple Sea disaster, and the evolution of OPEC+ coverage, amongst different issues”.
The BMI analysts mentioned within the report that, within the close to time period, the Purple Sea threat premia will seemingly supply continued assist to Brent.
“Nevertheless, over time, the market’s focus could drift away from safety of provide considerations and in the direction of the demand facet,” they added.
“The influence of the disaster has been felt most acutely within the merchandise markets, mirrored within the bigger relative features in key crack spreads. If sustained, this is able to put downward strain on the extra price-sensitive pockets of demand, with elevated gas use within the delivery sector providing solely a partial offset,” they famous.
“Extra typically, the continuing assaults pose draw back dangers to world financial progress by disrupting provide chains and upwardly pressuring inflation. The latter complicates central financial institution policymaking and we have now already seen a steep repricing of rate of interest expectations for the U.S. Federal Reserve,” they went on to state.
The analysts highlighted within the report that Brent is usually delicate to motion by the Fed and identified that “feedback made by its Chairman Jerome Powell on January 31 to the impact {that a} charge reduce in March was unlikely was a key set off for the 6.7 % decline in costs over the next three days”.
To contact the creator, e mail andreas.exarheas@rigzone.com