Analysts have lowered their 2024 oil price forecast for the first time since February, reflecting lower risks to supply from ongoing wars in the Middle East and Ukraine, a Reuters poll showed on Friday, as markets gear up for a meeting of OPEC and its allies this weekend.
A poll of 41 analysts and economists surveyed by Reuters in the last two weeks saw Brent crude averaging $84.01 per barrel in 2024 with U.S. crude at $79.56 – down from April forecasts of $84.62 and $80.46, respectively.
Brent has averaged around $83.50 so far in 2024 and fell about 6% in May in its first monthly drop this year.
“In the coming months, we do not anticipate any immediate threats to the oil market stemming from the conflicts in the Middle East or the Ukraine-Russia situation the market has gradually discounted the ‘war premium’ associated with these geopolitical risks,” said SEB analyst Ole Hvalbye.
“However, this perspective carries a degree of complacency, and there remains a possibility that the market could be unexpectedly impacted by sudden developments,” Hvalbye added.
OPEC+, led by Saudi Arabia and Russia, is set to meet virtually on June 2, where it is expected to keep in place its voluntary production cuts of about 2.2 million barrels per day (bpd).
The organisation will need to keep production constraints in place for the rest of the year and next year to keep oil prices around the $80 per barrel level, said Suvro Sarkar, energy sector team lead at DBS Bank.
“Non-OPEC production growth will be driven by offshore developments in Brazil, Guyana, Norway, etc, while U.S. production will stay elevated,” Sarkar added.
On the demand front, analysts expect growth of between 920,000 and 1.8 million bpd in 2024, with an average estimate of 1.35 million.
That is down from a forecast of 1.37 million bpd in a Reuters poll in April but above the 1.1 million bpd forecast by the Paris-based International Energy Agency in May.
Source: Hellenic Shipping News
