Average oil prices should remain below 2022’s $100/bbl average for international Brent benchmark, but exceed the medium-term price of $50-70/bbl, according to Moody’s Investors Service.
Oil prices, which have slumped by 40 per cent, after adjusted for inflation, in one year since March 8, 2022 high are likely to creep back toward $100 in the second half of 2023 despite fears of rising interest rates, major oil traders say.
Prices could hit the $90-$100 per barrel range in the second half of this year as global demand is set to reach record levels amid constrained supply, Russell Hardy, CEO at the world’s largest independent oil trader, Vitol Group, was quoted by Bloomberg Television.
“The prospect of higher prices in the second half of the year, in the sort of $90-$100 range, is a real possibility,” Hardy said.
Scott Sheffield, CEO of oil producer Pioneer Natural Resources, believes oil will approach the triple digits again this summer. "We remain highly constructive on oil prices. I'm still very optimistic that we'll move back into that $90 to $100 range sometime earlier this summer."
Average oil prices should remain below 2022’s $100/bbl average for international Brent benchmark, but exceed the medium-term price of $50-70/bbl, according to Moody’s Investors Service.
“Oil price trajectory this year remains uncertain and depends on economic outcomes in major economies,” says Madhavi Bokil, senior vice-president, CSR, Moody’s.
“We expect two opposing market forces will keep oil prices highly volatile this year: a slowdown in demand and restricted supply.”
In 2022, oil soared above $100 for the first time since 2014 as demand recovered from Covid-19 lockdowns in much of the world and Russia's invasion of Ukraine added to supply concerns. But Brent crude ended the year close to $86 on fears of global recession.
Traders said a return of Brent crude to above $100 at some time in 2023 is not unexpected although consensus in the industry currently is for lower prices in 2022. However, a Reuters survey of 30 economists and analysts forecast Brent would average $89.37 a barrel in 2023, down from $99 in 2022. Goldman Sachs lowered its 2023 Brent forecast to $92.
According to Hardy, global oil demand will rise by 2.2 million barrels per day (bpd) in 2023 compared to 2022 and will reach a record level, driven by a jump in diesel, naphtha, and liquid petroleum gas (LPG) demand.
“You don’t have much room on the supply side is the reality, so the potential for a rally is certainly there,” Hardy said.
Analysts believe that oil may resume its rally in 2023 as Chinese demand recovers after Covid curbs were scrapped and lack of investment limits growth in supply. While the Russian invasion of Ukraine and its impact on supply and the energy markets continues to hang over the oil market, the economies of the United States and China are dictating current price trends and will determine where prices will go when they break out of the current range. If China rebounds strongly after the reopening, prices could break above the recent tight range, considering that global inventories are below the five-year average and signs are emerging of a tighter physical crude market.
In a soft landing for the US economy, prices could soon surpass $90 per barrel, some of the world’s biggest physical traders of oil say.
Copyright © 2022 Khaleej Times. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).
FAQs
Jonathan Fortun of the Institute of International Finance cites geopolitical factors.
How high will oil go in 2023? ›
Main takeaways: Oil Price Forecast 2023-2030
By the end of 2023, experts anticipate a price range of $70-$90 per barrel. This forecast, based on data from Capital.com, OilPrice.com, and EIA, suggests a trend toward stabilization in the face of economic headwinds that may reduce demand. 2024 Projections.
Can oil hit $100? ›
While the volatility in the markets is likely to be short-lived, as per experts, the rising tensions can, however, lead to a surge in crude oil prices. With the tensions in the Middle East escalating, experts believe that crude oil prices can hit $100 per barrel in the near future if tensions increase.
What is the prediction for oil prices? ›
The U.S. Energy Information Administration, in a Feb. 6 report, projected Brent to average $82.42 in 2024 and $79.48 in 2025. WTI will average 77.68 a barrel for 2024 and $74.98 in 2025, the EIA estimated. Keep this in mind: When prices peak, they can be variable.
What is the outlook for oil in 2024? ›
World oil demand growth is now forecast at 1.3 mb/d in 2024, down sharply from last year's 2.3 mb/d expansion. The slowdown in growth, already apparent in recent data, means that oil consumption reverts towards its historical trend after several years of volatility from the post-pandemic rebound.
What is the oil price forecast for 2024? ›
EIA now expects Brent crude oil prices to average $88.55 a barrel this year, up from its earlier forecast of $87, while U.S. West Texas Intermediate crude prices are now expected to average $83.78 a barrel in 2024.
How much will oil prices drop in 2023? ›
Data source: Bloomberg, L.P. Note: Spot prices are in nominal terms and are not adjusted for inflation. The price of Brent crude oil averaged $83 per barrel (b) in 2023, down from $101/b in 2022, a difference of $19/b after rounding.
What is the oil price forecast for 2023 2024? ›
Global oil prices.
We forecast the Brent crude oil spot price will average $90 per barrel (b) in the second quarter of 2024 (2Q24) $2/b more than our March STEO, and average $89/b in 2024. This increase reflects our expectation of strong global oil inventory draws during this quarter and ongoing geopolitical risks.
Should I buy oil now or wait? ›
You should consider bulk buying your heating oil in the summer to stock up before the autumn and winter ahead; this should deliver you the best savings. However, wider events can also impact the price of heating oil, so the best time to buy home heating oil isn't set in stone.
What happens to oil if dollar collapses? ›
If the value of the U.S. dollar drops, the price of both Brent and WTI crude oil will rise. not necessarily reflect daily or minor fluctuations in the dollar value, but significant adjustments in the dollar value should result in corresponding changes in the price of oil.
The highest recorded price per barrel maximum of $147.02 was reached on July 11, 2008. After falling below $100 in the late summer of 2008, prices rose again in late September. On September 22, oil rose over $25 to $130 before settling again to $120.92, marking a record one-day gain of $16.37.
Why may oil not see a return to $100 a barrel in 2024? ›
OPEC+ faces record-breaking U.S. oil production and rising supply from other non-OPEC+ producers, including Brazil, Guyana, Canada, and Norway. Barring a major geopolitical escalation resulting in a large supply outage, oil prices are unlikely to reach $100 a barrel in 2024.
Will oil prices ever go back up? ›
We expect that the price of West Texas Intermediate (WTI) will be slightly lower but generally follow the same path. In the first quarter of 2024 (1Q24), we expect crude oil prices to rise somewhat, driven by OPEC+ production cuts leading to global stock draws of 810,000 barrels per day (b/d).
Are oil prices expected to continue to rise? ›
A survey of 46 economists and analysts forecast that Brent crude would average $82.33 a barrel in 2024, up from the $81.13 consensus projection in February. U.S. crude expectations were raised to $78.09, up from the $76.54 forecast last month.
What is the highest oil price ever? ›
In the early 1980s, concurrent with the OPEC embargo, oil prices experienced a "rapid decline." In early 2007, the price of oil was US$50. In 1980, globally averaged prices "spiked" to US$107.27, and reached its all-time peak of US$147 in July 2008.
Why oil may not see a return to $100 a barrel in 2024? ›
OPEC+ faces record-breaking U.S. oil production and rising supply from other non-OPEC+ producers, including Brazil, Guyana, Canada, and Norway. Barring a major geopolitical escalation resulting in a large supply outage, oil prices are unlikely to reach $100 a barrel in 2024.
