UBS cuts Q4 oil forecast by $8 per barrel

Wall Street financial services company UBS he cut its oil price forecasts for 2024-2026, citing weaker global demand and a more stable supply outlook. Analysts lowered their forecast for the average Brent crude oil in 2024 by 4 to $80 a barrel, forecast for Q4 2024 falling to $75 a barrel from $83.

UBS sees Brent averaging $75 a barrel in both 2025 and 2026, down $5 a barrel. Analysts have suggested that OPEC+ will be forced to delay the reversal of voluntary production cuts, with any significant increases now seen in 2027 or 2028, compared with earlier expectations of a return to mid-2025.

Oil’s latest rally continued in Monday’s session despite crude output from the Gulf of Mexico resuming following the disruption caused by Hurricane Francine. Brent crude for November delivery was up 1.3% at 11:50 a.m. ET to trade at $72.56 a barrel, while WTI crude for October delivery was up 1.0% to trade hands at $69.66/bbl.

Last week, commodity experts at Standard Chartered reported that oil markets are overlooking the imminent removal of even more barrels from the markets in the coming months. In July, Russia, Iraq and Kazakhstan submitted their compensation plans to the OPEC Secretariat for overproduced crude volumes in the first six months of 2024. According to OPEC, all overproduced volumes will be fully compensated over the next 15 months until September 2025, with Russia “paying back” a cumulative amount of 480 kb. /d, Iraq 1,184 kb/d and Kazakhstan 620 kb/d. According to StanChart, offsetting production cuts by the three OPEC members amount to a combined cut of 370 kb/d in October and then an amount ranging between 162 kb/d and 206 kb/d for November 2024 to September 2025. StanChart determined that the addition of the compensation program to the recently announced reduction in targets due to the delay in the implementation of the phase-down will lead to a drop in OPEC production by 530 kb/d in Q4-2024; 540 kb/d lower in Q1 and Q2-2025 and 560 kb/d lower in Q3-2025 if all commitments are kept.

By Alex Kimani for Oilprice.com

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