BMI Keeps $85 Oil Price Forecast Despite Downside Risks

The international crude benchmark Brent is expected to average $85 per barrel this year and $82 a barrel next year, BMI, a Fitch Solutions company, said in a report, keeping its outlook on oil prices despite the balance of risks lying “firmly to the downside.”

BMI noted that for its price forecast for 2024 to pan out, Brent needs to average $86 a barrel in the second half of the year, as it has averaged $83.50 year to date.   

“We have opted not to revise our outlook at this point, but rather wait and see how price action plays out over the coming peak demand season in the northern hemisphere,” BMI said in a note carried by Bernama on Thursday.

Analysts at BMI expect the Fed to cut the key interest rate to 4.75% from 5.5% by the end of the year, which is set to support oil demand.

Fed is meeting next week for its next FOMC meeting, and the CME FedWatch Tool shows a 98.4% probability that the central bank will keep monetary policy as-is. 

A Reuters poll showed this week that the Fed might start cutting interest rates in September. Nearly two-thirds of economists polled by Reuters early this month expect the first cut from the Fed funds rate to a 5.00%-5.25% range, from 5.25%-5.50% now, to come in September this year.

Some analysts became more optimistic about Fed cuts later this year following some weak U.S. economic data.

“Data outside of the oil world was sufficiently weak that it's going to give cover to the Fed to finally cut rates and spur some growth,” John Kilduff, partner at Again Capital, told Reuters.

Meanwhile, oil prices rebounded in Asian trade on Thursday, following days of selling, especially on Monday and Tuesday after OPEC’s announcement of production policy for the year ahead.

However, Brent Crude continued to trade below $80 per barrel, at around $78.80, and WTI Crude was below $75 early on Thursday, at $74.50 per barrel.

By Tsvetana Paraskova for Oilprice.com

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