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Oil Prices Set to Rise as Global Stock Refills Ramp Up

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Alex Kimani

Alex Kimani

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. 

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$100 Oil To Return In 2023

  • Portfolio manager Eric Nuttall sees oil returning to $100 per barrel in 2023.
  • The end of coordinated SPR releases, the gradual reopening of the Chinese economy and sanctions on Russian crude could lift oil prices in 2023. 
  • Bank of America predicted that Brent could quickly go past $90 per barrel on the back of a dovish pivot in the U.S. Federal Reserve.

Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners LP, has told the Financial Post that oil prices will return to $100 per barrel in 2023. According to the analysts, many of the headwinds that have cut short the oil price rally this year including China’s zero-Covid policy and the coordinated SPR releases by several governments, will no longer be there in 2023. Coupled with sanctions on Russia’s oil and gas, this should elevate oil prices. He has also predicted that the energy sector will continue to outperform other market sectors due to high demand in oil and gas stocks.

Nutall is not the only bull here.

Last week, the Bank of America predicted that Brent could quickly go past $90 per barrel on the back of a dovish pivot in the U.S. Federal Reserve and a “successful” economic reopening by China.

BofA has forecast that Brent prices--currently trading at $77.93--will average $100/bbl in 2023 thanks to Chinese oil demand recovery on a post-COVID reopening coupled with a drop in Russian supplies of about 1 million barrels per day (bpd). According to the investment bank, OPEC+ is likely to fully implement a 2 million bpd output cut in a bid to boost oil prices.

The forecast has come at a time when oil prices have been steadily declining due to fears that a weakening global economy would curb fuel demand. Last week, Beijing announced the most sweeping changes to its strict Covid-19 guidelines, including relaxing testing requirements and travel restrictions. Further, people infected with Covid-19 but have only mild or no symptoms are now allowed to isolate at home instead of convalescing in centrally managed facilities.

Our oil demand and price projections for 2023 rely heavily on robust China and India demand growth, so any Asia reopening delays could affect our expected price trajectory,” said the bank, adding that the path to a post-pandemic environment may not be easy “given the low levels of immunity in China.”

Crude oil futures have surrendered nearly all gains for the year, posting their largest weekly losses in more than eight months, as restarts for key pipelines eased supply concerns coupled with ongoing worries about a global recession and weaker crude demand from China. 

By Alex Kimani for Oilprice.com


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Leave a comment
  • Mamdouh Salameh on December 21 2022 said:
    This is a very easy projection to make given the almost certain wider easing of lockdown in China, the strong fundamentals of the global oil market and the shrinking global spare production capacity including OPEC+'s.

    I neither included sanctions nor price cap on Russian oil exports because they have failed completely to impact adversely on Russian oil exports, production and oil prices.

    I therefore see Brent crude oil price surging beyond $100 a barrel in the first quarter of 2023 and probably even touching $110.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert
  • James Kovalsky on December 24 2022 said:
    Everyone has been predicting oil to go up but it has been persistent in it's decline. If you only look at one side of the issue then oil will always seem under valued. But the entire world has been raising interest rates in lock step with the FED. With still no end in sight. The problem is the rate increases put a damper on the economy, but are not that effective at targeting inflation. So demand will weaken, and supply has been stable since the effects of the pandemic. Time for stability and with that comes $80/bbl crude.

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