BMI, a Fitch Solutions company, has revealed its latest Brent oil price forecasts through 2027 in a new report sent to Rigzone.
According to the report, IMC sees Brent prices at $85 a barrel in 2023, $83 a barrel in 2024 and 2025 and $80 a barrel in 2026 and 2027. The Bloomberg Consensus, which was also published in the report and which IMC contributes, sees the price of Brent at $86 a barrel this year, $87 a barrel in 2024, $85 a barrel in 2025, $79 a barrel in 2026 and $71 a barrel in 2027.
In a report sent to Rigzone on April 3, Fitch Solutions projected that Brent would average $85 a barrel this year, $83 a barrel in both 2024 and 2025, and $80 a barrel in 2026 and 2027 .The Bloomberg consensus in that report saw Brent averaging $87 per barrel this year, $88 per barrel in 2024, $82 per barrel in 2025, $80 per barrel in 2026 and $75 per barrel in 2027. Fitch Solutions previously expected Brent to average $90 a barrel in 2023, its April report noted.
“This month we left our Brent crude price forecast unchanged at an average of $85 per barrel by 2023, reflecting a bullish outlook both relative to current spot price levels ($76 per barrel ) as with the average year-to-date price performance ($82 per barrel). ),” IMC analysts said in the latest report.
“Sentiment is currently extremely fragile and investors have turned a deaf ear to bullish market developments. We expect prices to recover in the second and third quarters, driven by seasonally stronger demand, production cuts for part of OPEC+ and crude inventories extracts,” the analysts added in the report.
“However, slowing global economic growth and expected recessions in the US and EU will weigh on the downside,” analysts warned.
Short sellers regain control
IMC analysts noted in the recently released report that short sellers have regained control of the market, “causing prices to fall 11 percent from their April peak.”
“During this same period, the number of long positions held by managed money in Brent has fallen by 25 percent, while the number of shorts has soared by 129 percent,” the analysts said in the report.
“The change in position has occurred in the face of the additional cut of 1.16 million barrels per day by OPEC+, announced on April 2 and enacted on May 1, a disruption of exports of 450,000 barrels per day in Iraq, which began on March 25 and has yet to resume, and more than 100,000 barrels per day of oil production losses in Canada stemming from wildfires earlier this month.” the analysts added.
“In total, this equates to nearly two percent of global offline supply, and yet the market response has been relatively muted,” the IMC analysts continued.
While supply developments should have supported Brent, it is the broader slowing macro context that appears to be driving price action, analysts noted in the report.
“The economic outlook this year is challenging, with our analysts forecasting global real GDP growth of just 2.0% year-on-year, down from 3.1% in 2022 and 6.0% in 2021” , analysts noted.
“The declines are led by developed markets, which are forecast to see growth slow to 0.9 percent in 2023, reflecting a shallow recession in the US and a sharp slowdown in growth in the eurozone,” they added.
“High-frequency data from both markets has generally surprised to the upside YTD, while banking sector tensions have faded, with little impact on broader economic health,” the analysts said.
EIA, Standard Chartered, BofA Global Research
In its latest Short-Term Energy Outlook (STEO), which was released on May 9, the US Energy Information Administration (EIA) cut its average Brent spot price forecasts for this year and next year.
The EIA now sees the Brent spot price averaging $78.65 per barrel in 2023 and $74.47 per barrel in 2024, according to the latest STEO. In its previous STEO, which was released in April, the EIA projected the Brent spot price to average $85.01 per barrel in 2023 and $81.21 per barrel in 2024.
In another report released on the same day, Standard Chartered revealed that the price of Brent is currently $91 per barrel this year, $98 per barrel next year and $109 per barrel in 2025. The company made the same Brent price projections in another report. report submitted to Rigzone in January.
In another report sent to Rigzone this week, BofA Global Research revealed that it had lowered its average Brent forecast for this year.
“With negative macro trends poised to amplify demand weakness, we cut our median Brent crude price forecast to $80 per barrel in 2023,” BofA Global Research said in the report.
“Even then, we leave our 2024 Brent crude forecast at $90 a barrel because we believe OECD demand will eventually improve, while OPEC+ will likely continue to proactively and preemptively manage supply” , the company added in the report.
Brent’s highest close in 2023 so far was seen on January 23 at $88.19 a barrel. Its lowest close of 2023 so far was seen on May 3 at $72.33 per barrel. At the time of writing, the price of Brent is trading at $74.70 per barrel.
To contact the author, please email andreas.exarheas@rigzone.com
