Analysts polled by Reuters raised their oil price forecasts for a second consecutive month, expecting the OPEC+ cuts to continue tightening the market, although few see $100 oil due to the still uncertain global economic outlook.
The Reuters September Oil Poll showed on Friday that 42 economists and analysts now see Brent Crude prices averaging $84.09 per barrel in 2023, up from the $82.45 consensus projection in August.
Brent Crude prices have averaged $81.94 so far in 2023 and were trading just above $96 early on Friday.
Next year, Brent is expected to average $86.45 per barrel, according to the analysts surveyed in the Reuters poll.
The experts have also raised their average price forecast for WTI Crude, to
$79.64 a barrel in 2023, up from the August projection of $77.83. Next year, the U.S. benchmark is set to average $82.99 per barrel.
WTI Crude traded above $93 per barrel early on Friday, at $93.02, rising by 1.37%, as the OPEC+ supply cuts and the falling U.S. commercial crude oil inventories have raised the bullish sentiment on the market this week despite a strengthening U.S. dollar.
While most analysts in the Reuters poll see oil prices well supported above $80 per barrel later this year and heading into 2024, few expect $100 oil for a sustained period of time, due to the artificially tightened market – with the Saudi and OPEC+ cuts – and to the uncertain path ahead for many economies amid interest rate hikes.
“Saudi Arabia and Russia will dictate oil prices over the next three months,” Bill Weatherburn, commodities economist at Capital Economics, told Reuters.
Commenting on oil’s moves at the end of this week, ING strategists Warren Patterson and Ewa Manthey said on Friday “There is likely reluctance amongst participants to push too much higher right now with the market clearly in overbought territory.”
“There is also possible nervousness that OPEC+ and specifically Saudi Arabia could start to ease cuts earlier than scheduled if prices move much higher,” they noted.
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By Tsvetana Paraskova for Oilprice.com
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While the global oil demand and the fundamentals won’t change for the foreseeable future, one factor will and it is the market getting tighter and an imbalance seeping into the market and becoming a reality before the end of the year.
These very same factors which took Brent crude price to $97 yesterday are more than capable of taking it to $100 before the end of the year.
And with a tightening market and a continued robust demand, the $100 oil could be sustainable particularly with shortages looming on the horizon and with neither OPEC+ nor non-OPEC producers in a position to raise production sufficiently enough to offset expected shortages.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert