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OPEC’s decision to postpone its meeting to November 30 “put some additional, if temporary, downside pressure” on oil, analysts at BMI, a Fitch Solutions company, outlined in a report sent to Rigzone on November 24.
“Market participants had been hotly anticipating the meeting, expecting some update to the deal and evaluating the potential for a deepening or extension of the current cuts in place,” the analysts stated in the report.
“The near-term outlook for the market is challenging, with global economic activity slowing sharply and bearish data releases damaging sentiment,” they added.
“With risk premia related to the Israel-Hamas having faded rapidly, the outcome of the next OPEC+ meeting will be the key factor dictating price action over the coming month,” the analysts continued.
“While we anticipate a rollover of the existing cuts, we are not currently factoring in any additional reductions by the group,” they went on to state.
In the report, the BMI analysts revealed that they were holding to their current forecast for Brent crude to average $85 per barrel next year, “while noting risks to the downside”.
BMI expects the Brent crude price to average $83 per barrel in 2023, the report revealed. The company projects that the WTI crude price will average $79 per barrel this year and $82 per barrel next year, according to the report.
In a statement posted on its website recently, OPEC announced that the 187th Meeting of the OPEC Conference, the 51st Meeting of the Joint Ministerial Monitoring Committee, and the 36th OPEC and non-OPEC Ministerial Meeting will convene virtually on November 30.
A statement posted on OPEC’s site following the 35th OPEC and non-OPEC ministerial meeting in June revealed that the 36th OPEC and non-OPEC Ministerial Meeting was scheduled to take place on November 26 in Vienna, Austria.
In a report sent to Rigzone on November 3, analysts at BMI noted that trading had been volatile, “with global benchmark Brent crude closing above $90 per barrel and below $85 per barrel during the course of the week”.
“Prices are being torn between rising, conflict-related risks on the supply side and a slowing global economy, which will increase the downside pressures on demand,” the analysts added in that report.
“Our baseline scenario for the Israel-Hamas war sees fighting remain largely contained to the Gaza Strip in which there is no producing oil infrastructure. Nevertheless, we could see oil supply disrupted should U.S. President Biden bow to mounting bipartisan pressure to choke off illicit exports of Iranian crude,” they continued.
In that report, BMI’s price projections for Brent and WTI crude for 2023 and 2024 were the same as the projections in its latest report.
A market update sent to Rigzone last week outlined that Rystad expects the average oil price to hit $82 per barrel next year in a scenario where the Saudi voluntary cuts are not extended into 2024.
The company expects the average oil price to be $84 per barrel in 2024 in a scenario where Saudi Arabia fully unwinds the voluntary cuts by April and $87 per barrel in a scenario where the Saudis unwind voluntary cuts gradually until June, the update revealed.
Rystad anticipates that the oil price will average $92 per barrel in 2024 in a scenario where Saudi Arabia extends the one million barrel per day voluntary cuts into January and February, and gradually unwinds them until July, and $96 per barrel in a scenario where the Saudis extend the cuts until April and gradually unwind them until August, according to that update.
In another oil and gas report sent to Rigzone last week, Macquarie strategists outlined that, in their view, in the short term, the oil price would drop $5 per barrel in a status quo outcome from a November 26 OPEC+ meeting. The oil price would increase $3 per barrel in the short term with a “one million barrel additional cut and compliance” outcome from that meeting and drop $10 per barrel in the short term in a price war outcome from that meeting, the strategists highlighted in that report.
To contact the author, email andreas.exarheas@rigzone.com
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