BAKU, Azerbaijan, April 11. Futures markets suggest that crude oil prices will slide by 24.1 percent, to average $73.1 a barrel, in 2023 (from $96.4 in 2022) and continue to fall in the coming years, to $65.4 in 2026, Trend reports with reference to the World Economic Outlook of the International Monetary Fund (IMF).
“Uncertainty around this price outlook is elevated in part due to the uncertain rebound in China’s growth, as well as the energy transition. Upside price risks stem from potential supply disruptions, including those from Russian retaliation to a binding price cap, and insufficient investment in fossil fuel extraction. Following the financial market turmoil that emerged in mid-March, downside price risks of a widespread global economic relapse have increased significantly,” reads the report.
IMF estimates that natural gas prices at the European Title Transfer Facility trading hub receded 76.1 percent from record highs in August 2022 to $16.7 a million British thermal units (MMBtus) in February 2023 as concerns about supply shortages faded.
“Prices reached nearly $100 a MMBtu in late August when EU countries raced to refill their gas storage facilities amid fears of supply shortages during the winter. This followed Russia’s progressive shutdown of roughly 80 percent of pipeline gas supplies to European countries. Prices in the global liquefied natural gas market followed in lockstep. For the winter of 2022–23, a crisis was averted, with ample storage at European facilities owing to higher liquefied natural gas imports and lower gas demand amid high prices as well as an atypically mild winter. Lower demand due to an economic slowdown in China and substitution of other fuel sources, such as coal, also helped ease pressures on the global liquefied natural gas market,” the report says.
IMF analysts believe that a price decline to historical averages is expected by 2028.
“Risks of price spikes remain somewhat elevated, however, for next winter. Spillovers from gas markets caused a 50.9 percent slide in coal prices over the reference period,” the report reads.
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