Oil prices have experienced their third weekly decline in a row, marking the longest losing streak of the year. However, analysts predict that this downward trend may be coming to an end. Citi’s Global Head of Commodities Research, Ed Morse, cited multiple signs indicating that oil prices are bottoming out. Morse noted that inventories have decreased after experiencing significant increases in the first and second months of the year. Additionally, OPEC+’s recent production cuts and the upcoming higher demand season are expected to contribute to a rebound in oil prices.
Positive Outlook for the Future
ANZ and Goldman Sachs also share a positive outlook for the future of oil prices. ANZ predicts that global oil demand will grow by two million barrels per day, keeping the market under-supplied throughout 2023. Goldman Sachs maintains its forecast for a higher crude oil price tag, expecting Brent to rise to $95 per barrel by December and $100 per barrel by April 2024.
Uncertainty Remains
Despite the positive outlook, there are still concerns about the future of oil prices. The recent slide in prices is attributed to a confluence of economic concerns, such as the U.S. Federal Reserve’s interest rate hike and a surprise contraction in China’s April manufacturing activity. Additionally, there is uncertainty about OPEC’s next move. While some analysts predict that OPEC+ will continue with production cuts, S&P’s head of global demand and Asia analytics, Kang Wu, believes there is still a “big uncertainty” about what the cartel will do.
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