Brent Crude prices are not expected to reach $100 per barrel in 2023 unless a major geopolitical event rattles markets again, according to JPMorgan.
The OPEC+ alliance could add 400,000 barrels per day (bpd) to supply this year, and Russian exports could recover by the middle of 2023, JPMorgan said in a Friday note carried by Reuters.
Russian crude oil production is expected to recover by June, while high price levels would prevent the U.S. from repurchasing crude to refill the Strategic Petroleum Reserve (SPR), according to the Wall Street bank.
Demand will grow in China by 770,000 bpd as estimated by JPMorgan - a smaller increase than predicted by OPEC and the International Energy Agency (IEA).
Another Wall Street bank, Goldman Sachs, still expects Brent Crude to hit $100 per barrel this year, but only in December, compared to earlier expectations of $100 oil as soon as mid-2023. Last week Goldman Sachs cut its average Brent price to $92 a barrel this year from $98.
For next year, the bank sees Brent crude prices averaging $100 per barrel, down from its previous projection of an average of $105 a barrel Brent.
Despite the cut in oil price forecasts, Goldman Sachs is still one of the most bullish Wall Street banks on crude oil and commodities in general. Goldman continues to believe that there is a new supercycle in the making.
Goldman Sachs expects China's oil demand to grow by 1.1 million bpd this year after the reopening from Covid restrictions.
Early on Friday, oil prices were down by more than 3% and headed for a weekly loss, as this week's U.S. economic data suggested to analysts and market participants that the Fed isn't done with the interest rate hikes and could tighten monetary policy at higher levels and for a longer period of time to fight still sticky inflation.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More
Comments
OPEC+ is projecting global oil demand in 2023 to grow by 2.3 million barrels a day (mbd) with China accounting for 1.15 mbd or 50% of the demand growth.
China’s own demand in 2023 is projected to hit 17.1 mbd necessitating an import of 13.2 mbd.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert