BMI, a Fitch Solutions company, revealed in a new report sent to Rigzone that it has raised its Brent oil price forecasts through 2027.
The company now sees Brent oil prices at $83 a barrel this year, $84 a barrel in both 2024 and 2025, and $81 a barrel in 2026 and 2027, according to the report.
A Bloomberg consensus included in the report projected Brent to average $81 per barrel in 2023, $84 per barrel in 2024, $81 per barrel in 2025, $77 per barrel in 2026 and $72 per barrel in 2027. BMI Contributes to Bloomberg. consensus
In a report sent to Rigzone in early September, IMC forecast that Brent would average $80 per barrel this year, $83 per barrel in 2024 and 2025, and $80 per barrel in 2026 and 2027. A The Bloomberg consensus included in this report projected that Brent would average $81 per barrel in 2023, $83 per barrel in 2024, $81 per barrel in 2025, $78 per barrel in 2026 and $70 per barrel in 2027.
IMC also forecast Brent to average $80 per barrel in 2023, $83 per barrel in 2024 and 2025 and $80 per barrel in 2026 and 2027 in a report sent to Rigzone in early August. The Bloomberg Consensus included in this report projected Brent to reach $82 a barrel in 2023, $85 a barrel in 2024, $82 a barrel in 2025, $79 a barrel in 2026 and $67 a barrel in 2027.
“This month we have revised our Brent crude price forecast from an annual average of $80 per barrel in 2023 to $83 per barrel and from $83 per barrel in 2024 to $84 per barrel,” noted the BMI analysts on the company’s latest oil. price forecast report.
“Brent had an extremely strong price performance during the third quarter, rising more than 27 percent to close above $95 per barrel on September 29. The increase was supported by several factors, notably deepening OPEC+ supply constraints, which, when combined with seasonally stronger consumption, have pushed the global oil market into a deep deficit,” they added.
“However, we expect prices to soften in Q4, due to a partial reduction in the deficit and a more intense slowdown in the global economy,” the analysts continued.
Hamstrung prices
In the report, analysts noted that price performance in the year to date has been “hindered by the ongoing tug-of-war between improving oil market fundamentals and emerging uncertainties in the ‘world economy’.
“While several major economies have shown surprising resilience in the early parts of the year, high-frequency data would suggest that the economic momentum is already fading,” the analysts warned.
“Furthermore, as our 2023 real GDP growth forecasts have increased, we have become less optimistic in our outlook for next year,” they added.
Analysts said in the report that economic trends will inevitably affect physical demand for oil, but added that Brent is also very sensitive to changes in macro sentiment.
“Our current expectation is that the current economic cycle will bottom out next year, before returning to growth heading into 2025,” the analysts said in the report.
“As the nadir is passed, uncertainties will clear and risk appetite should improve, benefiting commodities such as oil. However, this will depend on the depth and duration of the slowdown and how it compares to consensus expectations,” they added.
“The current rise in oil prices adds downside risk to the outlook, fueling inflation. This could force central banks to keep interest rates higher for longer, dragging down economic activity and growth ” analysts continued.
“In recognition of the weakening of the macro context in the early part of next year, we have already reduced the forecast for a year-on-year rise in Brent from $3 per barrel to $1 per barrel,” the analysts said.
IMC representatives added to the report, however, that they acknowledge that their current oil demand forecasts are relatively optimistic compared to other major forecasters.
“As such, we see the demand side as the main downside risk to our outlook, if consumption in emerging markets, excluding China, disappoints our expectations,” they said in the report.
Brent’s Outlook
In its latest Short-Term Energy Outlook (STEO), which was released in September, the US Energy Information Administration (EIA) raised its average Brent spot price forecasts for both 2023 and 2024.
The EIA projected in this STEO that Brent spot prices will average $84.46 per barrel this year and $88.22 per barrel next year, forecasting the commodity to reach $86.09 per barrel in the third quarter of 2023, $92.68 per barrel in the fourth quarter. $91 per barrel in the first quarter of 2024, $88 per barrel in the second quarter and $87 per barrel in both the third and fourth quarters.
In its previous STEO, which was released in August, the EIA predicted that spot Brent prices would reach $82.62 a barrel this year and $86.48 a barrel next year. In this STEO, the EIA forecast the commodity to average $83.77 per barrel in the third quarter, $87.65 per barrel in the fourth quarter, $88 per barrel in the first quarter of 2024, $87 per barrel in the second quarter, $86 per barrel in the second quarter. in the third quarter, and $85 per barrel in the fourth quarter.
In a report sent to Rigzone on September 26, Standard Chartered projected the price of Brent ICE to average $91 per barrel in 2023, $98 per barrel in 2024 and $109 per barrel in 2025. In this report, Standard Chartered forecast the commodity would average $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
In a separate Standard Chartered report sent to Rigzone on August 22, the company had exactly the same forecast for ICE Brent.
In another report sent to Rigzone on September 27, BofA Global Research revealed that it had raised its fourth-quarter Brent forecast to $96 a barrel and maintained its call for $90 in 2024.
In another report sent to Rigzone on September 18, Bjarne Schieldrop, SEB’s chief commodity analyst, said “it is very likely that we will see dated Brent move above $100 per barrel.”
At the time of writing, the price of Brent crude is trading at $90.39 a barrel. The commodity closed at $96.55 a barrel on September 27 before falling to a close of $90.92 a barrel on October 3.
To contact the author, please send an email andreas.exarcheas@rigzone.com
