Crude Oil Forecast: Brent Tests Key $85 Handle Ahead of Data Heavy Wee

Crude Oil Forecast: Brent Tests Key $85 Handle Ahead of Data Heavy Week
Crude Oil Forecast: Brent Tests Key $85 Handle Ahead of Data Heavy Week
Across the world, oil prices continue to hover around a key $85 handle. This despite continued conflicting factors pulling them in different directions, including global demand growth, Russia’s supply disruptions and uncertainty over OPEC+ output.

Amid these factors, oil prices are likely to remain volatile in the months ahead as analysts debate how much of an oil price surge is possible. Some forecasts predict a spike in prices to $90 a barrel, while others expect them to stay flat or fall.

Analysts say that the key to finding a path to sustained higher oil prices is the ability to replace cheaper supplies with sustainable alternatives. This is essential as societies work to reduce their dependence on fossil fuels and embrace alternative energy sources such as solar power and natural gas.

However, the price of renewable energy is not yet at a level where it will be able to replace cheap crude oil. This means that prices of the more expensive, low sulphur, light, sweet crude oils will remain relatively high for the foreseeable future.

The global economy will grow by about 3.3% in 2024, but this will be driven primarily by growth in non-OECD countries. The EIA forecasts that global consumption of liquid fuels will increase to 102.2 million b/d in 2024, from an average of 99.4 million b/d in 2022, led by China, India and other emerging markets.

But the EIA notes that global demand will decline slightly in 2023 and again in 2024. This will be due to a combination of synchronous policy tightening and worsening financial conditions.

As a result, there will be an average build of more than 0.6 million b/d of petroleum inventories in 2023 and 2024. This will be driven by oil production increases in non-OPEC countries, as well as a decrease in demand.

Oil Production Outlook: The United States, Norway and other non-OPEC producers are expected to add 2.4 million b/d of oil production in 2023 and another 1.1 million b/d in 2024. The increase is primarily due to production gains from the Permian region of Texas, as well as to production growth of hydrocarbon gas liquids and biofuels in the U.S.

In addition, the United Kingdom and other European Union countries are projected to maintain a strong rate of oil production. However, these forecasts are subject to considerable uncertainty as they do not account for potential changes in OPEC production targets and ongoing developments in Iran, Libya and Venezuela. In addition, production from these nations may be negatively affected by potential political or regulatory issues. Ultimately, the EIA forecasts that OPEC production will increase to 31.2 million b/d in 2024.