Fitch Solutions Country Risk & Industry Research lowered its Brent oil price forecasts in its latest oil price outlook report, which was sent to Rigzone on Tuesday.
According to the company’s report, Fitch Solutions now sees Brent averaging $90 per barrel in 2023, $83 per barrel in 2024 and 2025, and $80 per barrel in 2026 and 2027. The Bloomberg Consensus, which Fitch Solutions is a contributor to and which was also included in the report, sees Brent coming in at $88 per barrel this year, $89 per barrel next year, $84 per barrel in 2025, $77 per barrel in 2026, and $73 per barrel in 2027.
Fitch Solutions’ previous oil price outlook report, which was sent to Rigzone at the start of February, showed that the company expected Brent to average $95 per barrel in 2023, $88 per barrel in both 2024 and 2025, and $85 per barrel in both 2026 and 2027. The Bloomberg Consensus included in that report projected that Brent would be $87.3 per barrel in 2023, $86.1 per barrel in 2024, $85 per barrel in 2025, $78.3 per barrel in 2026, and $72.5 per barrel in 2027.
“This month we have made a downward revision to our Brent crude price forecast,” Fitch Solutions analysts stated in the company’s latest report.
“The price performance in the year to date has been weaker than expected and, despite several bullish developments in the market, Brent has failed to break back into the $90s. That said, a healthy support line has been forming around $80 per barrel, which should help stave off any significant moves to the downside,” the analysts added in the report.
“Moreover, the fundamentals appear broadly balanced. The macroeconomic outlook remains challenging, but growth expectations seem to have bottomed out and, in some markets, have begun to rise. OPEC supply remains constrained, but there are considerable uncertainties around the outlook on Russia, while we expect significant gains in non-OPEC supply. Overall, we hold a neutral to bullish outlook for 2023, skewing to bearish next year,” the analysts went on to note.
Bullish Factors
In the latest report, Fitch Solutions analysts stated that speculative positioning grew increasingly bullish over January and February, “with the ratio of long to short managed money positions in Brent rising from 2.8 at the start of the year, to a peak of 10.0 in mid-February”.
“Open interest, while remaining low in historical terms, has also risen considerably,” the analysts added.
“All else equal, this should have translated into stronger price gains. However, market participants seem to have lacked conviction to move decisively either to the downside or the up,” the analysts continued.
The analysts also highlighted in the report that there have been signs of improvement in the fundamentals.
“Physically-settled contracts continue to trade a discount to Brent futures, but the gap has narrowed, falling from an average of $1.4 per barrel in January to $0.8 per barrel in February,” the analysts said.
“Meanwhile the futures term structure has also firmed, with the first to second month spread moving back from contango into backwardation, while backwardation in the first to sixth month spread has deepened, from a January average of $1.2 per barrel, to an average of $2.1 per barrel last month, both signaling expectations of a tighter market,” the analysts added.
Standard Chartered, Bofa Global Research
In a report sent to Rigzone on March 7, Standard Chartered projected that the Brent oil price would average $91 per barrel in 2023, $98 per barrel in 2024, and $109 per barrel in 2025.
The report showed that the company anticipated that the commodity would average $90 per barrel in the second quarter of this year, $88 per barrel in the third quarter, $93 per barrel in the fourth quarter, $92 per barrel in the first quarter of 2024, and $94 per barrel in the second quarter of next year.
In a previous report sent to Rigzone on January 10, Standard Chartered’s Brent price projections were identical.
In a separate report sent to Rigzone on March 3, BofA Global Research outlined that the organization’s latest oil price forecasts point towards Brent averaging between $80 and $90 per barrel across the next three years.
At the time of writing, the price of Brent crude oil is trading at $82.89 per barrel. The commodity’s peak 2023 close, so far, came on January 23, when it hit $88.19 per barrel. The lowest 2023 close, so far, was seen on January 4, when Brent hit $77.84 per barrel.
To contact the author, email andreas.exarheas@rigzone.com
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