BMI EXPECTS BRENT OIL PRICES TO AVERAGE $86 PER BARREL IN 2 WEEK 2024

KUALA LUMPUR, June 6 (Bernama) — Brent crude oil prices are expected to average US$85 per barrel in 2024, but will need to average around US$86 per barrel in the second half of the year (2H 2024) to reach the forecast, according to BMI.

In its latest commentary on the oil price outlook, Fitch Solutions said crude oil prices were at $83.50 a barrel year to date.

BMI also maintained its Brent crude price forecast at an annual value of $82 per barrel in 2025.

“In light of this, the risk balance for our forecast is firmly on the downside.

“However, we have chosen not to revise our outlook at this time, but rather to wait and see how price action unfolds in the coming peak demand season in the Northern Hemisphere,” it said in a note.

BMI said oil traders see interest rate cuts in the United States (US) as supporting both economic growth and oil demand and should therefore support Brent thereafter.

It said the US Federal Reserve is likely to cut its benchmark rate to 4.75% from 5.50% currently by the end of the year.

In addition, it said Brent had closely tracked high-frequency economic data releases over the past 18 months, with releases that beat consensus expectations coinciding with gains in oil prices and vice versa.

Current global real gross domestic product growth is expected to remain broadly stable at 2.4 percent in 2024 and 2.5 percent in 2025, down from 2.6 percent in 2023, BMI said.

“Geopolitical risks remain elevated, (and) none of these (current) conflicts are likely to be resolved in the near term, indicating that ongoing (if low and sporadic) risk premiums will be priced into oil,” it said .

However, BMI pointed out that the US dollar could provide support to Brent.

“We expect the US Dollar Index (DXY) to remain largely between 100 and 108 this year, compared to 104 currently.

“Slowing US economic growth and faster-than-expected interest rate cuts will push the dollar lower.

“But the ongoing US presidential race has increased geopolitical risk and generally more challenging conditions for risk assets in 2H could push the greenback higher, lifting oil,” it said.

On the oil demand side, BMI pegged growth for the year at 1.9 million barrels per day, with China and India accounting for more than 40 percent of the global net increase in fuel consumption forecast in 2024.

On the supply side, this has generally supported prices as the Organization of the Petroleum Exporting Countries Plus (OPEC+) maintains tight market management, BMI said.

— BERNAMA

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