Idle cranes line the empty docks at the port of Constanta, Romania, Tuesday, June 21, 2022. Oil prices will remain stable for the rest of the year with marginal declines in 2023, analysts said, except one that predicts “more bullish than bearish factors” for the market going forward.
Andrei Pungovschi | Bloomberg | Getty Images
Oil prices will remain stable for the rest of the year but decline slightly in 2023, according to a group of analysts who spoke to CNBC, although a minority opinion sees crude rising before the end of 2022.
Global oil prices soared to over $120 a barrel after the outbreak of the Russian-Ukrainian war, but have fallen below $100 a barrel in recent weeks.
Oil prices are currently trading around $95 a barrel for Brent and just below $89 a barrel for US West Texas Intermediate.
Analysts told CNBC they expect oil prices to remain flat through the second half of 2022, though they said the potential impact of an economic downturn has yet to materialize. been taken into account. During a recession, oil prices tend to fall, which could give consumers a break. .
Current prices are expected to hold for the rest of the year
JPMorgan maintains a modest estimate of $101 a barrel for the rest of the year.
Crude will fall to an average of $101 a barrel in the second half of 2022, said Natasha Kaneva, head of global commodities research at JPMorgan. She predicted that the price per barrel would be 98 dollars in 2023.
Aerial view of the YPF La Plata refinery on August 1, 2022 in La Plata, Argentina. YPF’s La Plata Refinery Plant is one of YPF’s main refinery plants and can process approximately 190,000 barrels of crude oil per day. A JPMorgan expert in August maintained a modest estimate of $101 a barrel for the rest of the year, after hitting an earlier high in the second quarter of 2022.
Gustave Garello | Getty Images News | Getty Images
“While we don’t believe recession risk is already priced into the price of oil, that risk is growing,” Kaneva and others at JPMorgan said in a July report. Oil prices tend to fall 30-40% during recessions, according to the report.
Kaneva told CNBC that she only lowered her estimate for 2023 slightly, attributing the adjustment to a weaker-than-expected impact from the EU embargo on Russian crude.
The EU plans to replace two-thirds of Russian gas imports by the end of the year as Russia’s war in Ukraine continues to rage.
“Some European governments have changed parts of their sanctions over fears of rising crude prices, effectively allowing the removal of Russian crude by European companies,” she said. “With the postponement of plans to exclude Russian oil from the marine insurance market, the impact on Russian supply could be significantly lower than our current projections.”
Other analysts echoed an estimate of a near-status-quo figure for current oil prices and forecast slight declines in 2023.
“In terms of my current forecast and barring a major unforeseen event, I still expect Brent crude to average $108 this year,” said Glenn Wepener, chief executive and chief strategist at First. Abu Dhabi Bank. Wepener added that his Brent price outlook for 2023 is $97 per barrel.
Similarly, S&P Global’s Daniel Yergin told Squawk Box on Wednesday that he believes oil prices will be “where they are or a little bit higher” by the end of the year. He added that oil prices are likely to be determined by geopolitical developments, rather than supply and demand factors.
“More of a benefit”
However, one oil analyst said he believes that in the short term, “the bullish factors will outweigh the bearish factors.”
Refinitiv Oil Research Asia director Yaw Yan Chong said he saw “more upside” in pricing, attributing his projection to soaring gas prices in Europe – especially this winter – and the Saudi Arabia toying with the idea of production cuts.
Gasoline prices are displayed at a gas station in Monterey Park, California, July 19, 2022. – Gasoline prices in the United States fell from historic highs earlier this summer, a retreat highlighted by a politically beleaguered White House as a sign of moderating inflation. Global oil markets have been on a rollercoaster ride in the first half of 2022 – from soaring above $120 a barrel when the Russian-Ukrainian war broke out, to the current relief of $101.70 a barrel. a barrel for Brent crude and $94.11 a barrel for US West Texas Intermediate.
Frederic J. Brown | AFP | Getty Images
Saudi Arabia said last week that OPEC was ready to cut oil production at any time. The announcement came as Europe faces disruptions in energy supplies from Russia.
“I believe the looming winter will be the most important driver of oil prices,” Yaw said. “Europe is already grappling with insufficient supplies, which will worsen when the comprehensive ban on Russian oil imports comes into effect.”
“In the short term, for the duration of the winter at least,” he said, “I think the bullish factors will outweigh the bearish ones.”