In a report sent to Rigzone on Friday by Fitch Group, analysts at BMI, a unit of Fitch Solutions, noted that oil markets “appear to be somewhat lacking for direction, as participants weigh up conflicting drivers on the supply and demand sides”.
The analysts highlighted in the report that Brent crude has remained “broadly rangebound over the past month, fluctuating between $84.3 per barrel and $87.4 per barrel at close”.
“Production risks are elevated, amid ongoing tensions in the Middle East and the conflict between Russia and Ukraine,” the analysts said in the report.
“Adding to this, meteorologists are anticipating a busy hurricane season, threatening infrastructure in the U.S. Gulf Coast. However, OPEC+ is planning to begin returning cut barrels to market from October, putting it in competition with a surge in supply amongst non-OPEC+ producers outside of the United States,” they added.
Looking at demand in the report, the analysts said, “high frequency economic data is painting a somewhat healthier picture for the more energy-intensive segments of the global economy, which have been generally unperforming this year, while oil consumption is also strengthening seasonally this quarter”.
“On the downside, the economic outlook is somewhat muted, and a heavy election schedule poses considerable risks on the macro side,” the analysts warned.
In the report, the BMI analysts revealed that they are forecasting that Brent crude will average $85 per barrel in 2024 and $82 per barrel in 2025. They acknowledged in the report, however, that “the balance of risk to the outlook is skewed firmly to the downside”.
“This month, we hold to our forecast for Brent crude to average $85 per barrel in 2024, falling to $82 per barrel in 2025. Price performance in the year to date has been slightly weaker than we had anticipated, posing downside risk to our outlook,” the analysts said in the report.
“However, we expect consistent strength over the summer months to boost the annual average, offsetting some softness later in the year,” they added.
“Meanwhile, we are eyeing a potential downward revision to our forecast for 2025, with our fundamental data indicating that a supply surplus will emerge over the coming quarters,” they went on to state.
In a research note sent to Rigzone by the JPM Commodities Research team last Monday, J.P. Morgan analysts revealed that they were maintaining their “long-held view that Brent oil will reach $90 by September, average $84 in the third quarter and $83 for the year, before dropping into mid-$60s in 4Q25”.
“Our balances suggest a ~1.0 million barrel per day deficit in oil liquids in 3Q, comprised of a large 1.6 million barrel per day surplus in products, but a massive 2.4 million barrel per day draw in crude,” the analysts said in that note.
“This dichotomy represents a historic norm in terms of direction but is an anomaly in terms of scale. Supply and demand, so far, have performed largely in line with our expectations, but if there is a weak spot in our balances, it would likely be on the refining side,” they added.
“Throughout this year, we have been consistently downgrading our projections for growth in global processing rates for 2024, and now see only one million barrel per day growth this year vs 1.8 million barrels per day originally,” the J.P. Morgan analysts went on to state.
In a report sent to Rigzone by Standard Chartered Bank Analyst Sudakshina Unnikrishnan last Tuesday, Standard Chartered projected that the ICE Brent nearby future crude oil price will average $98 per barrel in the third quarter and $106 per barrel in the fourth quarter.
The company expects the commodity to average $109 per barrel next year, the report showed.
Source: www.rigzone.com
