A consortium of 37 economists and analysts has made significant upward revisions to their 2023 oil price predictions, marking the first alteration in four months. The rationale behind this shift lies in their belief that the OPEC+ alliance’s output cuts will successfully counterbalance China’s sluggish economic growth.
According to these commodity experts, the forecast for Brent crude now stands at an average of $82.45 per barrel for 2023, surpassing the previous consensus of $81.95 established in July. Additionally, they anticipate that WTI crude will average $77.83 per barrel for the entire year, up from the prior projection of $77.20. This revised forecast implies that Brent crude prices will average $86.15 for the period spanning September through December, albeit slightly lower than the current market rate of $86.70.
In light of diminishing crude oil inventories, these projections may seem relatively conservative. Global oil markets continue to grapple with tight supplies, with Standard Chartered estimating a substantial inventory draw of 2.8 million barrels per day (mb/d) for August and an anticipated 2.4 mb/d draw for the following month. Experts contend that inventory constraints will persist as the dominant driving force behind price trends in the upcoming months. However, they caution that macroeconomic concerns could still disrupt the market, reminiscent of the turmoil witnessed during the second quarter of this year.
Analysts are also anticipating that Saudi Arabia is inclined to extend its voluntary reduction of one million barrels in oil supply for a third consecutive month, thereby spanning into October. This proactive strategy appears to have yielded favorable outcomes, propelling oil prices to a 15% increase over the past month, currently standing at approximately $86 per barrel.
StanChart, in particular, predicts that highly effective production restraint measures, chiefly led by Saudi Arabia, will set the stage for an imminent price rally. The trajectory is expected to drive Brent prices above the high reached earlier this year at $89.09 per barrel and ultimately towards their fourth-quarter average projection of $93 per barrel. There’s even speculation of an intra-quarter high surpassing the symbolic $100 per barrel mark.
Nevertheless, a bearish perspective persists in some quarters. Reuters market analyst John Kemp previously cautioned that the deceleration in India’s oil demand growth could exert a dampening effect on oil prices, despite recent records in consumption. During the first seven months of this year, India’s oil consumption increased by approximately 255,000 barrels per day (bpd), culminating in a total consumption of 135 million metric tons. However, this growth rate pales in comparison to the 415,000 bpd surge observed in 2021/22 as economies rebounded from the COVID-19 pandemic and associated lockdowns.
Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Info Streamline journalist was involved in the writing and production of this article.
