Brent Crude to Collapse in 2024 on Oil Market Surplus

Brent crude will collapse to the low $70s/bbl next year as the global market swings back to a surplus, according to a Citigroup report.

• The shift in prices will reflect more oil coming into the market, the bank said.
  The balance is expected to swing from a 1.5mbpd draw in 3Q 2023, to a minimum of 0.2mbpd build this quarter, and a 1.1mbpd rise over full year of 2024, the report stated.
• Brent crude is forecast to average $82/bbl in the fourth quarter of this year, $80/bbl during 1Q24, $73/bbl in 2Q24, $74/bbl in 3Q24 and $68/bbl in 4Q24.
• “Higher prices in the near term could make for more downside for prices next year”, Citigroup said.
• The bank is showing the overall market’s view that demand will ease next year as the pandemic recovery factors continue to ease off, particularly from China, and the transport fuel demand peak is approaching soon, while crude supply from non-OPEC+ suppliers has been growing.
• “OPEC+ cuts have driven oil higher in a prolonged bull run, but 4Q ‘23 is set to move lower, with further 2024 downside,” the bank said.
• Citigroup also added that OPEC+ may also ease output cuts if prices are too high, with some sensitivity for impact on consumer countries.