BMI, a Fitch Solutions company, has revealed its latest Brent oil price forecasts in a new report sent to Rigzone this week.
According to the report, BMI now projects that Brent will average $80 per barrel this year, $83 per barrel in both 2024 and 2025, and $80 per barrel in both 2026 and 2027.
The report also included projections from the Bloomberg Consensus, which BMI is a contributor to. The Bloomberg Consensus included in the report sees Brent averaging $82 per barrel in 2023, $85 per barrel in 2024, $82 per barrel in 2025, $79 per barrel in 2026, and $67 per barrel in 2027.
“As anticipated, oil prices have strengthened heading into the third quarter, supported by seasonally higher demand, unilateral cutbacks by Saudi Arabia and weakening Russian exports,” BMI analysts noted in the report.
“In fact, the market balance has been progressively tightening over the course of the year, spurred by ongoing increases in oil consumption, supply disruptions among key producers, and renewed cuts by OPEC+,” the analysts added.
“However, the oil markets have been dominated by bearish macro sentiment, which has previously prevented a pass through to prices,” the analysts continued.
In the report, the analysts said they expect the market to remain well-supported over the third quarter, “before softening over Q4 and Q1”.
“That said, we are generally more sanguine on the market outlook next year, as the economic downturn bottoms out and global trade flows accelerate,” the analysts added.
The BMI analysts noted in the report that global economic activity is slowing and said they expect to see short and shallow recessions in both the eurozone and the U.S., “which will erode physical oil demand and weigh on sentiment”.
“However, the slowdown has been widely anticipated and should, by now, have largely been priced into Brent,” the analysts said.
The BMI representatives stated in the report that a cooling economy, elevated inflation levels, and lingering price pressures at the pump will all curb oil consumption but noted that the outlook is highly varied across different markets, “with Asia, MENA and LATAM posting relatively robust demand growth, while N. America, W. Europe, CEE and SSA all weigh to the downside”.
On the supply side, the BMI analysts said in the report that “a tug of war is ongoing between tight production constraints in place across OPEC+ markets and healthy output gains among non-OPEC producers”.
“The former is extending its 1.16 million barrel per day cut from May to the end of 2023 and has committed to hold the production cut deal in place until December 2024,” the analysts stated.
“Meanwhile, in the near term, a one million barrel per day unilateral cut by Saudi Arabia and export declines in Russia are forcing the market deeper into deficit,” they added.
The analysts said in the report that this is being offset by strong production growth elsewhere, “most notably in the Americas”.
“Persistent (if falling) cost pressures and souring sentiment in the shale patch points to weaker growth heading into 2024,” the analysts stated in the report.
“However, the U.S. will continue to add substantial volumes next year, compounded by rising supply across various other markets, including Brazil, Guyana, Canada, Mainland China, Kazakhstan, and Norway,” they added.
In a previous report sent to Rigzone back in May, BMI projected that the Brent price would average $85 per barrel in 2023, $83 per barrel in both 2024 and 2025, and $80 per barrel in both 2026 and 2027. The Bloomberg Consensus included in that report saw the Brent price averaging $86 per barrel this year, $87 per barrel in 2024, $85 per barrel in 2025, $79 per barrel in 2026, and $71 per barrel in 2027.
In another report sent to Rigzone in April, Fitch Solutions forecast that Brent would average $85 per barrel this year, $83 per barrel in both 2024 and 2025, and $80 per barrel in both 2026 and 2027. The Bloomberg Consensus in this report saw Brent averaging $87 per barrel in 2023, $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 per barrel in 2023, its April report highlighted.
A report sent to Rigzone earlier this week by Standard Chartered showed that the company expected ICE Brent to average $91 per barrel in 2023, $98 per barrel in 2024, and $109 per barrel in 2025. The company anticipated that ICE Brent would come in at $88 per barrel in the third quarter of this year, $93 per barrel in the fourth quarter, $92 per barrel in the first quarter of 2024, $94 per barrel in the second quarter, $98 per barrel in the third quarter, and $106 per barrel in the fourth quarter, according to the report.
In a report sent to Rigzone on July 14, BofA Global Research said its sensitivity analysis suggests 2023 consensus estimates now assume around $83 per barrel Brent oil prices. BofA Global Research reiterated its $90 per barrel average Brent price forecast for 2024 in another report sent to Rigzone on July 26.
According to the latest short term energy outlook from the U.S. Energy Information Administration (EIA), which was released last month, the Brent spot price will average $79.34 per barrel in 2023 and $83.51 per barrel in 2024. The July STEO projected that the Brent spot price will average $78.32 per barrel in the third quarter of 2023, $79.97 per barrel in the fourth quarter, $81.98 per barrel in the first quarter of 2024, $83 per barrel in the second quarter, $84 per barrel in the third quarter, and $85 per barrel in the fourth quarter.
To contact the author, email andreas.exarheas@rigzone.com
