As persistent underproduction from several countries belonging to the Organisation of Petroleum Exporting Countries(OPEC)+ and slower shale growth which may likely tighten the oil market further in 2024, Barclays has raised its Brent price forecast for next year by $8 to $97 a barrel.
“Slowing non-OPEC+ supply growth, driven primarily by the US, and persistent underproduction from several OPEC+ producers due to structural constraints bolsters our core thesis behind a constructive view on oil prices,” the bank said in a note carried by Reuters.
But Barclays revised down its Brent forecast for this year to $84 per barrel, down by $3 from its previous forecast. The bank’s fourth-quarter estimate of $92 a barrel Brent remained unchanged.
Barclays expects a deficit of 670,000 barrels per day (bpd) on the oil market this year, and a 250,000 bpd deficit next year.
The bank sees a tussle between major oil producers and consumers unfolding.
“A tussle between key producers and consumers is visible in the G-7 efforts to cap Russian export prices and OPEC+ announces significant voluntary adjustments to output,” Barclays said in the note.
In recent weeks, market fundamentals have turned more bullish, with oil demand estimated to have hit a record in June and possibly heading to a fresh record this month, per forecasts by the International Energy Agency (IEA).
Meanwhile, Saudi Arabia and OPEC+ are staying the course with the cuts, with the Kingdom extending its unilateral cut of 1 million bpd into September and signalling it could extend it further, or extend and deepen it.
Global oil demand hit a record 103 million bpd in June, and August could see yet another peak, the IEA said in its closely-watched Oil Market Report for August.
Global oil demand is set to grow by 2.2 million bpd this year, with China accounting for more than 70 per cent of growth, the agency noted.
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