Commerzbank has cut its oil price forecasts for this year and next to reflect a persistent “battered” sentiment on the market, due to economic growth concerns despite the additional OPEC+ cuts.
Commerzbank revised down its forecast for Brent Crude to $85 per barrel at the end of this year, down from $90 a barrel previously expected. The bank cut its year-end forecast for the U.S. benchmark, too, seeing WTI Crude at $80 per barrel at end-2023, compared to an earlier expectation of $85 per barrel.
Commerzbank also reduced its Brent and WTI price forecasts for 2024—both by $5, to $90 and $85 per barrel, respectively.
Early on Friday, both benchmarks were rising slightly, headed for a second consecutive weekly gain as supply concerns began to seep through a preoccupation with demand. Brent traded at $76 and WTI was just below $72 per barrel as of 8:15 a.m. EDT.
According to Commerzbank, the market sentiment will continue to be bearish in the short term amid concerns about economies in the new age of high interest rates.
A supply deficit could still materialize in the second half of 2023, due to lower OPEC+ supply and robust demand in Asia, the bank’s analysts said in a note carried by Reuters.
However, the bearish sentiment is likely to prevail until the market sees a prolonged period of inventory drawdowns, Commerzbank said.
Despite the latest cuts to supply announced by Saudi Arabia and Russia early this week, investment banks are no longer calling a $100 a barrel oil later this year, and some, like Commerzbank, cut their forecasts.
Morgan Stanley, for example, revised down earlier this week its Brent price forecast for this quarter to $75 per barrel from $77.50. The fourth-quarter price outlook was also cut, to $70 from $75 per barrel. Morgan Stanley revised down the 2024 Brent forecasts, too, and doesn’t see oil prices averaging more than $80 a barrel in any of the four quarters of 2024.
“Despite low investment, non-OPEC+ supply has been growing robustly and supply from Iran and Venezuela has been creeping higher. We still model stock draws in Q3, but expect oil price softness to continue as the market’s focus shifts to H1 2024 when balances look in surplus,” the bank said in a note cited by Reuters.