BAKU, Azerbaijan, Nov.19
By Leman Zeynalova – Trend:
From Q222, the market balance is set to reverse, flipping from deficit to oversupply, as demand growth decelerates and supply surges in OPEC+ and the US, Trend reports with reference to Fitch Solutions.
“Oil prices have dipped to a six-week low, reaching around USD80/bbl at the time of writing. Prices fell after reports surfaced of a potential coordinated release of strategic petroleum reserves by China and the US, following a virtual meeting between President Joe Biden and President Xi Jinping. However, the market remains fundamentally tight and any volumes released are unlikely to substantially alter the global balance,” the company said.
As such, Fitch Solutions expect any downside to prices to be limited in both scale and duration.
“We hold to our forecast for global benchmark Brent to average USD71.5/bbl and USD72/bbl in 2021 and 2022, respectively,” reads the recent report released by Fitch Solutions.
The reference forecast of Oxford Institute for Energy Studies (OIES) for Brent stands at $71.6/b in 2021, $80.9/b in 2022 and $76.6/b in 2023.
“We see the recent price strength persisting in the near-term on the tightness in OECD stocks and fuel switching, but slow returning crude supplies from OPEC+ and more moderate gas-to-oil switching than currently expected are still seen to cap prices in the $80s range. Beyond the near-term, returning supplies are expected to start pulling back prices to the $70/b and $80/b range in H2 2022 as some OPEC+ producers are seen struggling to meet their targets and low investment takes a toll on supply growth elsewhere,” reads the OIES report.
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