Idle cranes occupy empty docks in the port of Constanta, Romania, on Tuesday, June 21, 2022. Oil prices will remain stable for the rest of the year with marginal declines in 2023, analysts estimate, with the exception of one “more bullish than bearish”. factors” for the market in the future.
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Oil prices will remain stable for the rest of the year but will fall marginally in 2023, according to a group of analysts who spoke with CNBC, although minority opinion sees crude oil going up before 2022 is over.
Global oil prices skyrocketed to more than $120 a barrel after the Russo-Ukraine war broke out, but have fallen below $100 a barrel in recent weeks.
The oil price is currently trading around $95 a barrel for Brent oil, and just below $89 a barrel for the US West Texas Intermediate.
Analysts told CNBC they expect oil prices to remain stable in the second half of 2022, although they said the potential impact of an economic recession has not yet been priced in. In a recession, oil prices tend to fall, which could give consumers some peace of mind.
Current prices will be maintained for the rest of the year
JPMorgan maintains a modest estimate of $101 a barrel for the remainder of the year.
Crude oil will drop to an average of $101 a barrel in the second half of 2022, said Natasha Kaneva, head of global commodities research at JPMorgan. She predicted that the price per barrel would be $98 in 2023.
Aerial view of the YPF La Plata refinery on August 1, 2022 in Argentina’s La Plata. YPF’s La Plata refinery is one of the main plants of the YPF refinery and can process approximately 190,000 barrels of crude oil per day. A JPMorgan expert maintained a modest estimate of $101 a barrel for the remainder of the year in August, following an earlier peak in the second quarter of 2022.
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“While we do not believe that the risk of a recession has not yet been priced into the oil price, that risk is increasing,” Kaneva and others at JPMorgan said in a July report. According to the report, oil prices fall by 30 to 40% in recessions.
Kaneva told CNBC that she had only marginally lowered her 2023 estimate, attributing that adjustment to a weaker-than-expected impact from the EU embargo on Russian crude.
The EU plans to replace two-thirds of Russia’s gas imports by the end of the year as Russia’s war in Ukraine continues.
“Some European governments have modified parts of their sanctions amid fears of rising crude oil prices, allowing European companies to effectively shut down Russian crude,” she said. “With plans to shut down Russian oil from the marine insurance market having been delayed, the impact on Russian supply could be significantly lower than our current forecast.”
Other analysts reiterated an estimate of a near-status quo figure for current oil prices, predicting small declines in 2023.
“In terms of my current forecasts and barring a major contingency, I still expect Brent oil to cost an average of $108 this year,” said Glenn Wepener, executive director and senior strategist at First Abu Dhabi Bank. Wepener added that his outlook for the Brent price for 2023 is $97 a barrel.
Likewise, Daniel Yergin of S&P Global told Squawk Box on Wednesday that he thinks oil prices will be “where it is or slightly higher” by the end of the year. He added that oil prices are likely to be driven by geopolitical developments, rather than by supply and demand factors.
‘More of an advantage’
However, one oil analyst said he believes that in the near term, the “bullish factors will outweigh the bearish”.
Yaw Yan Chong, director of Refinitiv Oil Research in Asia, said he sees “more of a rise” in prices as he attributes his projection to rising gas prices in Europe – especially this winter – and that Saudi Arabia is toying with the idea of production cuts.
Gasoline prices will be displayed at a gas station in Monterey Park, California on July 19, 2022. – US gasoline prices have fallen from historic highs earlier in the summer, a slump highlighted by a politically ravaged White House as a sign of declining inflation. Global oil markets have taken a rollercoaster ride in the first half of 2022 – from skyrocketing to over $120 a barrel when the Russia-Ukraine war broke out, to the current relief of $101.70 a barrel for Brent oil and $94 a barrel. .11 per barrel for the American West Texas Intermediate.
Frederic J. Brown | Afp | Getty Images
Saudi Arabia said last week that OPEC is ready to cut oil production at any time. The announcement came as Europe faced power disruptions from Russia.
“I believe the approaching winter will be the main driver of oil prices,” Yaw said. “Europe is already struggling with insufficient supplies, which will get worse once the complete ban on Russian oil imports comes into effect.”
“In the short term, at least for the duration of the winter,” he said, “I think the bullish factors will outweigh the bearish.”