Oil price forecasts have been reduced as supply risks tend to decline

FE team
| Published: 31 May 2024 22:43:15

Analysts cut their 2024 oil price forecast for the first time since February, reflecting lower supply risks from the ongoing wars in the Middle East and Ukraine, a Reuters poll showed on Friday, as markets braced for a rally in OPEC and its allies during this period. weekend, reports Reuters.
A poll of 41 analysts and economists polled by Reuters over the past two weeks showed Brent crude LCOc1 averaging $84.01 a barrel in 2024 and US crude CLc1 at $79.56 – down from forecasts from April of $84.62 and $80.46, respectively.
Brent has averaged about $83.50 so far in 2024 and fell about 6 percent in May, its first monthly decline this year.
“In the coming months, we do not anticipate any immediate threat to the oil market arising from conflicts in the Middle East or the situation between Ukraine and Russia … the market has gradually reduced the ‘war premium’ associated with these geopolitical risks,” it said. SEB analyst Ole Hvalbye.
“However, this outlook has a degree of complacency and the possibility remains that the market could be unexpectedly affected by sudden developments,” Hvalbye added.
OPEC+, led by Saudi Arabia and Russia, is due to meet virtually on June 2, where it is expected to maintain its voluntary production cuts of about 2.2 million barrels per day (bpd).
The organization will need to maintain production constraints for the rest of the year and next year to keep oil prices around $80 a barrel, said Suvro Sarkar, team leader of the energy sector at DBS Bank.
“Non-OPEC production growth will be driven by offshore developments in Brazil, Guyana, Norway, etc., while US production will remain elevated,” Sarkar added.