Source: Zhitong Finance
As the oil market faces supply shortages, UBS expects the price of Brent crude oil to rise to $91 per barrel in the next few months.
UBS Group announced in its latest forecast that the price of Brent crude oil is expected to rise to 91 US dollars per barrel in the next few months due to supply shortages in the oil market. The bank further predicts that the eight OPEC+ member countries participating in voluntary production cuts will extend the production reduction agreement for at least three months, and emphasizes the importance of complying with the agreement.
UBS commodity analyst Giovanni Stanovo pointed out, “As in recent years, we have observed that market sentiment towards oil does not match demand-side tracking data.” He further added: “Thanks to strong demand and OPEC+ countries' efforts to maintain market balance, we remain cautiously optimistic about crude oil prices in the coming months.”
UBS also predicts that oil demand will grow by 1.5 million b/d in 2024. This figure exceeds the long-term average annual growth rate of 1.2 million b/d. Based on the latest data, this growth forecast is even stronger.
As of press release, Brent crude oil had risen more than 1% to $82.72 per barrel.
OPEC proposed in its May monthly report that global oil demand is expected to increase by 2.25 million barrels per day in 2024 and 1.85 million barrels per day in 2025. According to information, OPEC+, the Organization of Petroleum Exporting Countries and its allies led by Russia, plans to hold a meeting on June 1 to decide whether to extend the voluntary production reduction agreement until the second half of the year.
The ANZ research department said that if production cuts are extended, it may cause oil prices to rise to $100 per barrel.
However, according to Citi, the possibility of further OPEC+ production cuts is still very low. The bank continues to predict that the average price of Brent crude oil will reach 86 US dollars/barrel in the second quarter of 2024, but it will drop to around 70 US dollars/barrel in the second half of 2024, and to around 60 US dollars/barrel in 2025.
It is worth mentioning that the US Energy Information Administration (EIA) announced on Wednesday that US crude oil inventories unexpectedly increased last week due to significant adjustments to uncounted inventories, while gasoline inventories declined due to the approach of the summer driving season and increased demand. According to the EIA report, crude oil inventories increased by 1.8 million barrels in the week ending May 17, to a total of 458.8 million barrels. This result is contrary to the 2.5 million barrels reduction expected by analysts.