BofA Global Research Reveals Latest Oil Price Forecasts
BofA Global Research now expects Brent to average $88 per barrel this year, according to a new report sent to Rigzone by the company, in which BofA Global Research revealed its latest oil price forecasts for 2023 and beyond.
“Coupled with limited U.S. shale supply growth and OPEC’s tight grip on the market, we now expect the reopening of China to result in Brent crude oil prices averaging $88 per barrel in 2023, down from $100 per barrel prior, and $90 per barrel in 2024,” BofA Global Research stated in the report.
“Why? Russian oil output has exceeded expectations in recent months … Yet oil prices should still recover as mobility in the Asian region gains steam over the next 18 months,” the report added.
“Moreover, if Europe and the U.S. avoid recession, world oil consumption could increase year-on-year by 1.8 million barrels per day in 2023 and 1.4 million barrels per day in 2024. Thereafter, oil demand should embark on a much slower growth path into 2025 and beyond, averaging just 400,000 barrels per day in 2026-28 in our projections,” the report continued.
BofA Global Research noted in the report that this “oil demand slowdown as electric vehicle sales ramp up into the end of the decade should meet limited supply increases due to structural underinvestment in the energy sector”.
“In this ‘race to the bottom’, we continue to believe Brent prices will average $60 to $80 per barrel through 2028 to keep the oil market balanced. As a reference point, prompt and five years forward Brent prices have averaged ~$70 and ~$60 per barrel, respectively, in the past five years,” the company added in the report.
Going forward, oil prices should see support from increased capital discipline across the global oil industry and thinning spare capacity, BofA Global Research stated in the report.
“But in a race to decarbonize by 2050 when both oil demand and supply need to contract, any major future imbalances will likely be resolved through sharp oil price swings,” the company warned in the report.
BofA Global Research also stated in the report that a big spike in oil prices is unlikely, “but still possible if Russia or another producer experiences a large disruption”.
In a separate report sent to Rigzone on February 21, Standard Chartered projected that the Brent price would average $91 per barrel in 2023, $98 per barrel in 2024, and $109 per barrel in 2025. The report anticipated that Brent 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.
A previous Standard Chartered report sent to Rigzone on January 25 projected the same Brent prices.
Earlier this month, Fitch Solutions Country Risk & Industry Research revealed in a report that it saw Brent crude oil averaging $95 per barrel in 2023, $88 per barrel in both 2024 and 2025, and $85 per barrel in both 2026 and 2027. The price projections to 2026 were unchanged from a previous Fitch Solutions’ oil price outlook report sent to Rigzone at the beginning of December 2022. That report did not have any price projections for 2027.
In another report sent to Rigzone this month, J.P. Morgan revealed that it had kept its oil price forecast unchanged at $90 per barrel.
“At this juncture, we opt to keep our price forecast unchanged at $90 per barrel and maintain our view that absent any major geopolitical events, it would be difficult for oil prices to breach $100 this year,” the company stated in the report.
“While we see Brent scaling up from $85 in 1Q23 to $89 in 2Q and exiting the year at $94, it should be a slow grind, tempering price volatility,” the company added.
According to its latest short term energy outlook, which was released in February, the U.S. Energy Information Administration sees the Brent spot average coming in at $83.63 per barrel in 2023 and $77.57 per barrel in 2024. In its previous STEO, which was released in January, the EIA projected that the Brent spot price would average $83.10 per barrel in 2023 and $77.57 per barrel in 2024.
At the time of writing, the price of Brent crude oil is trading at $83.00 per barrel. Brent has been up and down this year, closing at $77.84 per barrel on January 4, $88.19 per barrel on January 23, $79.94 per barrel on February 3, $86.61 per barrel on February 13, and $80.6 per barrel on February 22.