Bank of America expects oil to average $100 a barrel in 2023 as demand recovers in China and Russian crude exits the market.
Strict coronavirus lockdowns imposed by Beijing have curbed oil use in the world’s second-largest economy over the course of this year, but analysts expect restrictions to be eased as 2023 approaches.
So far this year, oil demand has slowed to 2 million barrels per day thanks to weak economic growth prospects in the United States, Europe and Asia, coupled with higher crude oil prices, following a rapid recovery in 2021 of 6.2 million barrels per day.
As for 2023, Bank of America forecasts oil demand growth at an average of 1.7 million barrels per day, which is lower than the International Energy Agency, the Energy Information Administration, and OPEC.
The imminent threat of a global recession might send prices below the $100 average target, although the cap on the Russian oil price might lead to some rally if more barrels of Russia disappear from the global market.
Bank of America analysts indicated that further disruptions to production might occur in Iraq, Nigeria and Libya as well.
“We expect a small surplus of 0.1 million barrels per day next year, and OPEC + is likely to get rid of a modest cut, moreover, we expect some shift from gas to oil to provide support for Brent oil and we continue to expect an average price of $100 per barrel,” the bank said. in 2023 and $94 for WTI, with a 12-month target at $110 a barrel.”
The rise of the dollar once morest rival currencies, in particular, has increased the cost of fuel for other countries to buy in local currencies, as this strength has contributed to slowing oil demand growth, although some of it has also stemmed from the sharp rise in global energy prices.
