Fitch Solutions Country Risk & Industry Research downgraded its Brent oil price forecasts in its latest oil price forecast report, which was sent to Rigzone on Tuesday.
According to the company’s report, Fitch Solutions now sees Brent averaging $90 per barrel in 2023, $83 per barrel in 2024 and 2025 and $80 per barrel in 2026 and 2027. The Bloomberg Consensus, of which Fitch Solutions collaborates and which was also included in the report, Brent reaches $88 per barrel this year, $89 per barrel next year, $84 per barrel in 2025, $77 per barrel in 2026 and 73 $ per barrel in 2027.
Fitch Solutions’ previous oil price outlook report, sent to Rigzone in early February, showed the company expected Brent to average $95 a barrel in 2023, $88 a barrel in 2024 and 2025 and $85 a barrel in 2026. and 2027. The Bloomberg Consensus included in this report projected Brent to be $87.3 a barrel in 2023, $86.1 a barrel in 2024, $85 in barrel in 2025, $78.3 a barrel in 2026 and $72.5 a barrel in 2027.
“This month we have made a downward revision to our Brent crude price forecast,” Fitch Solutions analysts said in the company’s latest report.
“Price behavior in the year to date has been weaker than expected and despite several bullish developments in the market, Brent has been unable to return to $90. That said, a support line has been forming healthy around $80 per barrel, which should help prevent any significant move to the downside,” the analysts added in the report.
“Furthermore, fundamentals appear broadly balanced. The macroeconomic outlook remains challenging, but growth expectations appear to have bottomed out and in some markets have begun to pick up. OPEC supply remains tight, but there considerable uncertainties about Russia’s outlook, while we expect significant gains in non-OPEC supply. Overall, we have a neutral to bullish outlook for 2023, tilting to the downside next year,” continued the analysts
Bullish factors
In the latest report, analysts at Fitch Solutions stated that speculative positioning grew increasingly bullish in January and February, “with the ratio of long to short managed money positions in Brent increasing from 2, 8 at the beginning of the year, up to a maximum of 10.0 in the middle of the year. -February”.
“Open interest, while remaining low in historical terms, has also increased considerably,” the analysts added.
“All the same, this should have translated into stronger price gains. However, market participants seem to have lacked the conviction to move decisively lower or higher,” they continued the analysts
Analysts also noted in the report that there have been signs of improving fundamentals.
“Physically settled contracts remain at a discount to Brent futures, but the gap has narrowed, from an average of $1.4 a barrel in January to $0.8 a barrel in February,” they said the analysts
“Meanwhile, the futures term structure has also consolidated, with the first-to-second-month spread returning from contango to pullback, while the first-to-sixth-month spread has deepened, from a January average of $1.2 per barrel, to an average of $2.1 per barrel last month, both indicating expectations of a tighter market,” the analysts added.
Standard Chartered, Bofa Global Research
In a report sent to Rigzone on March 7, Standard Chartered projected Brent oil prices to average $91 per barrel in 2023, $98 per barrel in 2024 and $109 per barrel in 2025.
The report showed that the company expected the commodity to average $90 per barrel in the second quarter of this year, $88 per barrel in the third quarter, $93 per barrel in the fourth quarter, $92 per barrel in the first quarter of 2024 and $94 per barrel in the second quarter of next year.
In a previous report sent to Rigzone on January 10, Standard Chartered’s Brent price projections were identical.
In a separate report sent to Rigzone on March 3, BofA Global Research stressed that the organization’s latest oil price forecasts point to Brent averaging between $80 and $90 per barrel over the next three years.
At the time of writing, the price of Brent crude is trading at $82.89 a barrel. The commodity’s 2023 closing high so far came on Jan. 23, when it hit $88.19 a barrel. The lowest close of 2023 so far was seen on January 4, when Brent hit $77.84 a barrel.
To contact the author, please send an email andreas.exarcheas@rigzone.com
