Morgan Stanley: Brent crude oil will return to $110 per barrel by the middle of 2023

As it became known on December 14, Morgan Stanley analysts suggest crude oil prices to rise back to the level of about $110 per barrel by the middle of the upcoming year. Their expectations are underpinned by increasing demand and certain deficit of supply in this market segment.

According to a statement made by the company's representatives, they preserve a constructive view of oil prices that are now being formed by growing demand and limited supply. The key drivers behind raising demand are China’s reopening and a recovery of aviation. At the same time, oil supply is constrained by insufficient investment, concerns over supplies from Russia, finishing of SPR releases, and a slower growth in shale sector in the U.S.

The investment bank’s specialists believe there’s a possibility that macroeconomic hurdles might lead to an oversupply of some degree, which, in its turn, may keep prices in a certain range in early 2023.

At the same time, Morgan Stanley's oil strategist Martijn Rats suggests the market to come to balance in the first half of 2023, and then to get tighter over the rest of the year.

Concerning American gas, Morgan Stanley’s analysts expect supply to exceed demand next year. As a result, the balance in the market might wane, thus creating downside risks after the winter.