Oil prices are set to rise toward $90 per barrel by the end of this year, driven by Chinese demand and a tightening market following OPEC+’s latest production cuts, a Reuters survey of 40 analysts and economists showed on Friday.
According to the experts, Brent Crude prices are expected to average $87.12 per barrel this year, a higher average forecast than in the previous poll in March.
So far this year, Brent prices have averaged around $82, while they traded at just above $79 early on Friday.
The U.S. benchmark, WTI Crude, is set to average $82.23 per barrel this year, the analysts in the April poll expect, compared to an average forecast of $80.88 per barrel in the Reuters poll in March. Early on Friday, the front-month WTI Crude contract traded at around $75 a barrel.
Most analysts, not only those polled by Reuters, expect the surprise additional OPEC+ cuts of 1.16 million barrels per day (bpd) between May and December to significantly tighten supply in the second half of this year. Rebounding demand in China is also set to reduce supply and potentially offset weakness in major mature economies if the ongoing interest rate hikes lead to recessions later this year.
Hours after OPEC+ announced the new cuts, Goldman Sachs raised its Brent Crude forecast to $95 from $90 at the end of the year. The bank also raised its Brent Crude forecast for 2024, now seeing it at $100 at the end of the year from an earlier projection of $97.
Despite concerns about economic growth, global oil demand is still set for a record high 101.9 million bpd this year, driven by a resurgent Chinese consumption, the International Energy Agency (IEA) said in its latest monthly report in the middle of April.
Solid demand from China raised global oil demand by 810,000 bpd year-on-year in the first quarter to 100.4 million bpd, the IEA said in its Oil Market Report for April.
“A much stronger increase of 2.7 mb/d is expected through year-end, propelled by a continued recovery in China and international travel,” the IEA noted.
By Tom Kool for Oilprice.com