Oil will continue to be extremely volatile this year

Reuters’ market columnist John Kemp discovered the following data in the recent survey across industries: most respondents expected that in the period from 2023 to 2027, the average price of oil would be $90 per barrel. He added that the average forecast for Brent is $87 per barrel for the current year. The level of oil prices’ volatility will be defined by two factors this year. These are the U.S. shale industry and China.

Shale drillers are unlikely to change their cautious approach to production growth this year. It means that oil prices may rise as supply growth is limited.

It is expected that oil demand in China will increase by 800,000 barrels per day this year. This means that it will amount to 50% of the growing global oil demand this year. Chinese authorities removed anti-COVID restrictions, but it doesn’t mean that there are no more cases of coronavirus in the country.

However, one strong bearish factor will stand against the bullish factors. This is the general attitude of the market to the world economy.