Fitch Solutions Gives Oil Price Warning

Fitch Solutions Gives Oil Price Warning
'The global economic outlook remains relatively bearish, raising concerns for demand'.

Fitch Solutions Country Risk & Industry Research, which is currently forecasting that Brent crude will average $105 per barrel in 2022 and $100 per barrel in 2023, warned in a new report that it is likely to make a downward revision to its forecast this month.

“Brent crude prices are broadly flat week-on-week, trading at around $90 per barrel at the time of writing,” Fitch Solutions analysts stated in the report, which was sent to Rigzone on Friday.

“However, trading has been volatile, with the front month contract closing as low as $84 per barrel on September 26, the lowest level since before Russia’s invasion of Ukraine. The partial recovery was led by rumors of a further planned OPEC+ production cut, with the group set to meet on October 5 and Russia reportedly pushing for a one million barrel per day reduction in output,” the analysts added.

“The hurricane season in North America is also lending supply-side support in the near term, with Hurricane Ian taking out around 160,000 barrels per day of production offshore the U.S. However, the global economic outlook remains relatively bearish, raising concerns for demand. Risk off sentiment is also bidding up the dollar, which is further weighing on Brent by raising the price of oil in local currency terms,” the analysts continued.

In a separate report sent to Rigzone last week, Fitch Solutions outlined that the balance of risk to its 2022 Brent forecast of $105 per barrel and its 2023 Brent forecast of $100 per barrel was “skewed to the downside”.

In that report, Fitch Solutions highlighted that oil prices were severely impacted by the Ukraine war of the first half of the year but noted that “over recent months the narrative has shifted, with bearish demand-side drivers overtaking bullish supply-side ones”.

“There have also been signs of the physical crude market weakening over recent months, with activity in the prompt market slowing alongside sagging futures prices. In the near term, the outlook is highly uncertain,” Fitch Solutions added in the report.

At the time of writing, the price of Brent crude oil is trading at $89.52 per barrel. The commodity hit a 2022 peak, so far, of $127.98 per barrel on March 8.

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



WHAT DO YOU THINK?


Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.


Most Popular Articles