Wall Street Forecasters See Room for Oil Price Recovery Next Year
December 18, 2023
The Baker Hughes Rig Count had oil rigs down 2 to a total of 501 oil rigs. The US has dropped 120 oil rigs thus far in 2023, and despite this oil production has been very good and this US shale production is a concern for OPEC+.
Several of shipping big boys Maersk, Hapag-Lloyd, and Euronav declared their vessels would be avoiding the Red Sea in response to recent Houthi attacks, which but a bid into freight rates. This news is also offering support Brent crude prices.
On Friday the Fed’s John Williams’ comments were seen as more hawkish ( more rate hikes) leading to a selloff in equites and a push higher in the US dollar.
Wall Street forecasters see some room for a recovery in oil prices next year, though not a significant rally. Projection for Brent crude oil in 2024 from five major banks average about $85 per barrel compared with current levels of $77 per barrel. Citigroup holds the lowest estimate at $75 per barrel, while Goldman Sachs has the highest estimates at $92 per barrel. Goldman Sachs sees world oil demand increasing by 1.6 million bpd next year and expects the core OPEC members will keep a tight leash on supplies.
NOAA reported the northern hemisphere just experienced its warmest October and November dating back to 1880s.
US crude oil inventories are 2% below the five-year average for this time of year. Total gasoline inventories are 2% below the five-year average, distillates are 12% below the five-year average, and propane stocks are 18% above the five-year average for this time of year.