BofA Global Research Reveals Latest Oil Price Forecasts

BofA Global Research has revealed its latest Brent and WTI oil price forecasts for 2024 in a new report published Tuesday, which was sent to Rigzone.

In the report, BofA Global Research outlined that it was maintaining a Brent forecast of $90 per barrel and a WTI forecast of $85 per barrel for next year.

“While better global energy demand trends in 2024 could further extend the upward momentum in energy prices, we see limits,” BofA Global Research analysts noted in the report.

“Our economics team recently upgraded their global GDP forecast and now expects growth of three percent in 2023 and 2.8 percent in 2024. Yet, oil betas to GDP are not as strong as they used to be and OPEC+ now has more spare capacity due to the deep cuts it just implemented,” they added.

“On this point, to offset a partial unwind of the Saudi ‘lollipop cut’ next year would likely require global GDP growth of 3.5 percent to four percent in 2024, 0.7 percent to 1.2 percent higher than BofA expectations,” the analysts continued.

“Also, recession risks have faded but not disappeared and high nominal and real interest rates globally will increase refinancing risks in the next year,” they went on to state.

In the report, the BofA Global Research analysts said they believe demand conditions need to improve materially for a sustained move above $100 per barrel in Brent.

“With oil supply and demand likely to remain roughly balanced in 2024, a sustained run up in Brent oil prices above $100 per barrel would thus depend on deeper oil supply cuts by OPEC+ (unlikely), unplanned supply disruptions (uncertain), or much better demand conditions (unexpected),” they stated.

The BofA Global Research analysts highlighted in the report that, net, they see 1.9 million barrels per day of global oil demand growth in 2023 and 1.06 million barrels in 2024, “led mostly by China”.

In its latest short term energy outlook (STEO), which was released in August, the U.S. Energy Information Administration (EIA) projected that the Brent and WTI spot average prices would come in at $86.48 per barrel and $81.48 per barrel, respectively, in 2024.

The August STEO sees the Brent spot price averaging $88 per barrel in the first quarter of next year, $87 per barrel in the second quarter, $86 per barrel in the third quarter, and $85 per barrel in the fourth quarter. The STEO anticipates that the WTI spot price average will be $83 per barrel in the first quarter of 2024, $82 per barrel in the second quarter, $81 per barrel in the third quarter, and $80 per barrel in the fourth quarter.

In its previous STEO, which was released in July, the EIA projected that the Brent spot price would average $83.51 in 2024 and that the WTI spot price would average $78.51 per barrel next year.

In that STEO, the Brent spot price was expected to average $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. The WTI spot price was expected to average $76.98 per barrel in the first quarter of next year, $78 per barrel in the second quarter, $79 per barrel in the third quarter, and $80 per barrel in the fourth quarter, the July STEO showed.

In a report sent to Rigzone this week, Standard Chartered revealed that it saw ICE Brent averaging $98 per barrel and NYMEX WTI averaging $95 per barrel in 2024.

Standard Chartered sees the Brent price averaging $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, the report highlighted. The company expects the WTI price to average $89 per barrel in the first quarter of next year, $91 per barrel in the second quarter, $95 per barrel in the third quarter, and $103 per barrel in the fourth quarter, according to the report.

Standard Chartered made the same quarterly, and overall, 2024 price projections for Brent and WTI in another report sent to Rigzone on July 18.

At the time of writing, Brent crude is trading at $83.91 per barrel, while WTI crude is trading at $79.85 per barrel.

Brent rose from a close of $72.26 per barrel on June 27 to a close of $87.55 per barrel on August 9. WTI rose from a close of $67.7 per barrel to a close of $84.4 per barrel during the same timeframe.

To contact the author, email andreas.exarheas@rigzone.com