Major Banks See Not Sufficient Upside for 100$/bbl Brent Crude Forecast

Several major banks have revised up their crude price forecasts for this year and 2024, amid lower OPEC+ supply, lower inventories, and an upward revision in oil demand but forecasts remain below $100/bbl, at least not for a sustained period, given uncertainties about Chinese oil demand, higher non-OPEC crude supplies and economic slowdowns in the US and Europe.

• UBS has increased their year-end Brent price forecast to $95/bbl, from $90/bbl previously, amid solid demand and lower OPEC+ production, close to a two-year low. The WTI year-end forecast was raised by $6/bbl to $91/bbl.
• UBS doesn’t expect a sustained move above $100/bbl over the next 12 months as that would likely lead to US supply growth and hurt demand growth in 2024. Oil demand is set to breach 103mbpd in August for the first time, the bank said.
• BofA sees the Brent target prices at $90/bbl in 2024 and $85/bbl for WTI. Crude prices are not expected to see a sustained rally into 2024 without gains in demand. Demand conditions need to improve materially for a move above $100/bbl in Brent. Low inventories are exacerbating tightness in petroleum product markets across the board ahead winter, the bank added.
• TD Securities sees WTI futures rising above $90/bbl this year. The bank does not see WTI to breach $100/bbl, as a slowdown in China’s economy and incremental supply increase by non-OPEC+ members in the second half of this year will put a cap on oil prices. The bank sees a significant crude market deficit this year amid OPEC+ supply cuts.
• Citigroup expects oil supplies to be far more robust in 2023 and 2024 than expected. Shortening oil this winter and into 2024 “makes sense” given the likelihood of soft demand and robust supply. On the demand side, the bank sees downside from the world’s exaggerated outlook on Chinese demand growth, the risk of a European recession and a slowdown of the US economy. Crude supply is largely coming from Russia, Iran, Iraq, Libya, Nigeria, and Venezuela, it added.
• Goldman has so far retained its latest Brent forecast at $86/bbl for the end of the year.
• In the August oil market reports, the IEA and EIA have revised their global demand forecast for this year, while OPEC kept its forecast stable. The IEA revised its global oil demand forecast for this year up to 102.2mbpd, from 102.1mbpd in last month’s report. EIA’s global oil demand has been revised up to 101.19mbpd, compared with 101.16mbpd in the July report. Projections remain well below OPEC’s and IEA’s views. OPEC forecasts oil demand to reach 102mbpd this year.