BAKU, Azerbaijan, Feb. 14
By Leman Zeynalova - Trend:
The combination of strong supply with weakening demand will likely allow gasoline prices to consolidate below 2022 levels over the next four years, Trend reports with reference to Fitch Solutions.
“We forecast strong gasoline supply as countries add new refining capacity. We expect APAC and MENA to see the most of new capacity online over the next years. However, other regions will also see some additions,” reads a report published by Fitch Solutions.
The company believes that gasoline prices will likely follow the Brent crude benchmark, which is now expected to average at USD76/bbl in 2022, above its last month forecast of USD72/bbl however substantially below current spot prices of over USD90/bbl.
“Although we have revised our Brent price upward this month, we note that our near-term outlook is somehow bearish as we see a supply glut forming in the upcoming months. The unwinding of OPEC+ deal will remain the key contributor to growing supply globally. However, we note that although we expect OPEC+ members to return barrels to the market broadly on schedule, the performance among producers will vary with some countries, like Algeria or West Africa, expected to struggle to reach pre-cut production levels,” reads the report.
A strong recovery in production in the US and some other large non-OPEC+ producers further supports Fitch Solutions’ price view.
“As we expect Brent prices to decline from current highs over the next quarters, we recognize risks to our Brent price forecast. Key uncertainty here is the geopolitical tension between Russia and Ukraine, which, in our view, will not end in a conflict, however will likely elevate Brent prices over the coming weeks,” said the report.
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