Unknown number about Oil prices in 2023

After a year of volatile oil prices, sometimes going above $120 and then below $80 per barrel, forecasting for 2023 is not easy.

The crude oil market has witnessed many great fluctuations in 2022, since the Russia-Ukraine conflict broke out at the end of February. In June, oil prices hit a record when surpassing the $120 mark per barrel. But by August, the decline of this item gradually appeared, reflecting the market’s insecurity about the specter of recession.

So far, with Brent and WTI oil prices trading around $82 and $78 per barrel, respectively, there are mixed forecasts about next year’s developments.

With global energy flows already suffering from great uncertainty and volatility this year, Ed Morse, Citi’s Head of Global Commodities, predicts the market will continue to weaken into 2023.

According to him, the price of Brent oil at the end of next year will be at $76 per barrel, down about 6%. Meanwhile, WTI could end the year below $70 per barrel. “We have the fundamental view that we will see an imbalance between supply and demand in 2023, with significantly more supply entering the market than demand, leading to increased inventories. “, Morse said.

Giving a higher forecast but also saying that demand is weak, research by Hong Leong Investment Bank (HLIB) on December 20 found that Brent oil prices fluctuated between $85 and $90 per barrel for next year. However, this is a figure that has been lowered from $93 to $98 per barrel that they previously offered.

According to the HLIB, the weak macroeconomic environment and ample supply led to a drop in crude oil prices of about $15 per barrel in November, citing the International Energy Agency that the sell-off took place despite the lower output from OPEC, the EU’s embargo on Russian crude oil has taken effect, and China has gradually eased its anti-epidemic policy.

Therefore, this bank believes that oil prices will continue to move sideways in the first half of next year. “We expect global oil supply and demand to be equal at 100 million to 102 million barrels per day in the first half of 2023,” the HLIB study wrote.

More optimistic, others are thinking oil prices will return to around $100 per barrel. Eric Nuttall, Senior Portfolio Manager at Ninepoint Partners believes oil prices could return to this level by 2023.

According to Eric, many factors hindering the rise of oil prices this year including China’s zero-Covid policy, the release of government stockpiles, will no longer exist next year. Meanwhile, sanctions on Russia’s oil and gas will increase the price of energy goods.

Last week, Bank of America also forecast Brent crude prices to average $100 per barrel next year as China’s oil demand recovers after reopening, along with a drop in Russian supply of about one million barrels. everyday. Besides, OPEC+ may fully implement the production cut of 2 million barrels per day in an effort to boost oil prices.

There is even a forecast that the price of oil next year may surpass the $120 mark per barrel. This week, Daniel Yergin, vice president of S&P Global, forecast oil prices likely to rise to $121 per barrel next year, when China reopens. “If China overcomes Covid it will create a lot of demand for the market,” he said.

The National Australia Bank (NAB) also forecasts prices higher than that, citing a recovery in Chinese economic activity next year. “As we look to 2023, we see the country’s reopening and global jet gasoline demand likely to continue steadily increasing, towards 2019 levels, which will tighten the oil market,” he said. global crude and push prices higher,” said Baden Moore, head of commodity research at NAB.

Although there are many different forecast numbers for the oil price in 2023, the common point among experts is that the oil market next year is very unpredictable.

“Our oil price and demand forecasts for next year are highly dependent on strong demand growth in China and India. Therefore, any delay in reopening in Europe is therefore likely to be expected. Asia could all affect our expected price trajectory,” noted Bank of America.

The HLIB also highlighted that global crude oil demand could be at increased risk, with a high probability that China will reopen in 2023. Similarly, The Economist points to a number of factors that could lead to the possibility. lack of oil in the second quarter of 2023.

Specifically, industrial customers in Europe are switching from natural gas to cheaper oil. Consumption in India and the Middle East is more resilient than expected. The reopening of China will boost the economic recovery.

With that, there have been signs that Europe’s embargo on Russian oil may be more disruptive than expected. The IEA believes that Russia will be forced to cut production by 1.6 million barrels per day, to 9.6 million barrels per day in the second quarter.

Russia has also threatened to cut oil supplies to participating countries, while supply growth from elsewhere is expected to be slow. Citi’s Ed Morse noted that next year’s energy market is more volatile because of the uncertainty surrounding the “5 fragile producers”.

They include Iran, Iraq, Nigeria, Libya and Venezuela. According to Morse, all are facing domestic turmoil that awaits. This can affect their supply output.

These factors lead to an oil supply deficit that could eat into already small global reserves, which are still near five-year lows, driving prices even higher. “All of this means that the real test of the West’s oil war tactics could come next year,” The Economist commented.

Source Phien An VNEPRESS