Fitch Solutions Reveals Latest Oil Price Forecast

Fitch Solutions Reveals Latest Oil Price Forecast
Fitch Solutions Country Risk & Industry Research has revealed its latest Brent crude oil price forecast.

Fitch Solutions Country Risk & Industry Research has revealed its latest Brent crude oil price forecast in a new report, which was sent to Rigzone recently.

The company sees Brent crude oil averaging $95 per barrel in 2023, $88 per barrel in both 2024 and 2025, and $85 per barrel in both 2026 and 2027, according to the oil price outlook report. The price projections to 2026 are unchanged from a previous Fitch Solutions’ oil price outlook report sent to Rigzone at the beginning of December 2022. That report did not have any price projections for 2027.

The Bloomberg Consensus, which was included in Fitch Solutions’ latest report and which Fitch Solutions is a contributor to, sees Brent averaging $87.3 per barrel this year, $86.1 per barrel in 2024, $85 per barrel in 2025, $78.3 per barrel in 2026, and $72.5 per barrel in 2027. In Fitch Solutions’ December report, the Bloomberg Consensus saw Brent coming in at $96.3 per barrel in 2023, $88 per barrel in 2024, $85 per barrel in 2025, and $80.1 per barrel in 2026. No price projections for 2027 were included in that Bloomberg Consensus.

“We have left our price forecast for Brent crude unchanged this month, at $95 per barrel for 2023, falling to $88 per barrel in 2024,” Fitch Solutions analysts stated in the latest report.

“While this puts us above-consensus for the year, we see several causes for optimism in the outlook. On the demand side, prospects for growth have improved, following the earlier than expected easing of Covid-19 containment measures in Mainland China,” the analysts added in the report.

“On the supply side, uncertainties around Russia continue to cloud the outlook, but slowing production growth in the U.S., further delays to the Iranian nuclear deal and continued production restraint by OPEC+ will combine to significantly decrease supply growth this year,” the analysts went on to note.

Brent Tightness

A separate Macquarie Bank Limited report sent to Rigzone on February 1 highlighted the “tightness in the Brent market”.

“Last week’s [week of January 23] move to backwardation following several weeks of N. Sea and WAF grade strength is another example of the tightness in the Brent market,” Macquarie Bank Limited analysts stated in the report.

“The large increase in Chinese crude imports appears to have tightened global sweet markets. That said, we expect persistently large global surpluses of 1.5 million barrels per day to reverse the rally, probably in early 2H23 after several positive catalysts have passed,” the analysts added.

In the report, the Macquarie Bank Limited analysts noted that global sweet premiums had increased by $6.08 since bottoming out, which they dubbed “an unusually large move”.

“Wider sweet-sour spreads are also reinforcing our view that core Brent is tight, despite persistent global surpluses. Over the last five weeks, Dated Brent vs ICE has increased by $0.96, also consistent with a tightening sweet market,” the analysts said in the report.

“In the past week, Algerian and Nigerian grades lost approximately $0.10 to $0.30 vs Dated Brent due to a potential squeeze in Forties and the impact of growing WTI Midland volumes competing with WAF for long haul destinations,” the analysts added.

EIA, Standard Chartered, BofA Global Research

According to the U.S. Energy Information Administration’s (EIA) latest short term energy outlook (STEO), which was released in January, the EIA expects Brent will average $83.10 per barrel in 2023 and $77.57 per barrel in 2024. The EIA’s next STEO is scheduled to be released later on Tuesday.

We forecast that the Brent crude oil price will average $83 per barrel in 2023, down 18 percent from 2022, and continue to fall to $78 per barrel in 2024 as global oil inventories build, putting downward pressure on crude oil prices,” the EIA noted in its January STEO.

In a BofA Global Research report sent to Rigzone on January 30, the company highlighted that it saw Brent averaging $100 per barrel this year. A Standard Chartered commodity roadmap report sent to Rigzone on January 24 showed that the company projected Brent would hit $91 per barrel in 2023, $98 per barrel in 2024, and $109 per barrel in 2025.

At the time of writing, the price of Brent crude oil is trading at $82.55 per barrel. Brent closed January 3 at $82.1 per barrel before rising to a close of $88.19 per barrel on January 23 and falling to a close of $79.94 per barrel in February 3. The commodity’s 2022 peak close came on March 8, 2022, at $127.98 per barrel.

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



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