Oil price will not exceed 100 USD due to the COVID-19 outbreak in China
A Reuters poll of 34 economists and analysts showed that they expect Brent to average $100.16 a barrel this year, down from $103.07 in in the previous poll, the first decline in four months.
The price of Brent oil – the reference for the global petroleum market – has averaged $99.80/barrel since the beginning of the year, and traded around $108.7 on April 29.
The poll results also showed that analysts and economists expect US crude oil (WTI) prices to average $96.21 per barrel this year, also down from the $98.49 forecast. before.
Analysts downgraded their forecast for oil prices in 2022.
Worries about economic growth and fuel demand in China, the world’s biggest oil importer, grew as the capital Beijing expanded mass testing for COVID-19, fueling predictions of a wave of coronavirus outbreaks. impending blockade similar to that in Shanghai.
The Organization of the Petroleum Exporting Countries (OPEC) recently cut its forecast for global GDP growth in 2022 to 3.9% from 4.2% in the previous reporting period. The response from the Russia-Ukraine conflict will have a major impact on the global economy and oil demand, with the situation worsening if the hostilities in Ukraine drag on for a long time.
A weak global economy means a decline in oil demand. In its latest forecast, OPEC said the world consumed about 100.5 million bpd of oil, down about 410,000 bpd from its forecast before the outbreak of the conflict in Ukraine.
“COVID-19 is not over yet, and falling demand in China in particular could have the opposite effect,” said Julius Baer analyst Norbert Rücker.
However, pollsters note that sanctions on Russia’s oil exports combined with the possibility of a protracted war will continue to boost prices of the top key commodity with this whole world.
OPEC cut its forecast for Russia’s crude oil production this year by 500,000 bpd, down 10.8 mb/d from the previous report period and 10.59 million bpd higher than production of 2021. US crude oil production was revised up by 261,000 b/d, to 17.75 million b/d.
Morgan Stanley recently raised its Brent price forecast for the third quarter of 2022 to $130, citing an “increased deficit” this year due to reduced supplies from Russia and Iran, with the potential for further declines. short-term demand.
However, most analysts agree that the oil market could reach balance by the end of the year, with an increase in US and OPEC+ shale production.
The IEA lowered its forecast for demand in the second quarter of 2022 due to China’s widespread blockade against COVID-19.
“We expect supply to meet significantly in 2022 as OPEC+ countries continue to aim to increase crude production to around 400,000 bpd,” said the Economist Intelligence Unit (EIU).
But supply growth could be constrained by the worsening situation in Libya, the EIU added.
Meanwhile, the release of strategic reserves by IEA member countries could contain prices and cause prices to drop temporarily, analysts said.
Reference: Reuters
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