Author: Kavya Guduru
Article: Original article
Publication date: Monday, December 12, 2022
Global benchmark Brent crude oil could recover and quickly jump above $90 per barrel amid a “dovish reversal” of the U.S. Federal Reserve’s monetary policy and a “successful” recovery of China's economy, predicts Bank of America (BofA).
Oil prices have been steadily decreasing lately due to concerns that a weakening global economy might reduce demand for fuel, thereby leading to a second consecutive quarter of lower prices.
BofA predicts that Brent oil prices will be $100 per barrel on average in 2023, which is also driven by oil demand recovery in China after its economic reopening and supply cuts from Russia by about 1 million barrels per day amid the European Union’s sanctions.
Moreover, a decrease in OPEC+ production by 2 million barrels per day could also take place in order to support prices, as stated in the bank’s research note.
At the same time, the bank’s oil demand and price forecasts for 2023 are heavily dependent on sustained demand growth in China and India, therefore, any delays in the Asian reopening could affect the projected price path, outlined BofA, adding that this path to a post-pandemic environment might be quite bumpy.
Forecast: Oil recovery with a target of $90