If OPEC+ maintains the supply cuts until the end of the year, given the positive demand scenario in Asia, we now believe that Brent prices could surpass $100 per barrel before 2024,”
In addition to oil supply, analysts project that interest rates in the United States are expected to peak this quarter. The American bank details that oil is expected to be traded between $80 and $100 in the short term. However, for the long term, the projection from Christyan Malek, head of oil and gas equity research at JP Morgan, is slightly more conservative, around $80.
“As we move into the next year, it will depend largely on how we see China evolving,” the analyst emphasizes.
It is worth noting that Brent crude oil, considered a benchmark in the international market, was down 0.27% on Friday, trading at $93.45 per barrel in November.
Meanwhile, WTI futures contracts for October had a slight decline of 0.04% on the same day, trading at $90.12 per barrel.
It should be noted that the commodity extended its gains last week after the release of U.S. economic indicators, which reinforced market expectations of the Federal Reserve (the U.S. central bank) maintaining interest rates in the range between 5.25% and 5.50% per year.
What Can Trigger a Surge in Oil Prices
According to Bank of America analysts, the global rise in interest rates has decreased global aggregate demand, limiting the growth in oil consumption and commodity prices.
According to Bank of America, there are three factors that can unlock oil prices: the actions of OPEC+ (Organization of the Petroleum Exporting Countries and its allies), U.S. interest rates, and the recovery of energy demand in Asia.
In the case of OPEC, the organization’s strategy to reduce supply before a potential collapse in oil prices should help the commodity in the coming months.
This is because the recent recovery in commodity prices is happening amid growing expectations of tighter supply by OPEC, following announcements by Saudi Arabia and Russia that they intend to reduce global reserves and extend oil production cuts until the end of the year.
In addition to oil supply, analysts project that interest rates in the United States are expected to peak this quarter, which would support oil prices.
However, analysts at the American bank highlight a point of concern for commodity prices: renewed inflationary pressure. “An increase in commodity prices could reignite a rise in interest rates by central banks and restart the battle between oil and money.”
Meanwhile, the improvement in Asian energy demand following weak growth in China post-pandemic is also currently supporting oil prices.
“After a crisis that rocked the energy market last year, Asia is once again leading global energy demand growth, despite concerns about China’s economic prospects,” the American bank emphasizes.
