BAKU, Azerbaijan, October 23. Anticipating a shift in the market's dynamics, BMI, a Fitch Solutions company currently projects Brent prices to average at $83 per barrel, down from the initial $85 per barrel estimate for May's gasoline price forecast, Trend reports.
Over the course of this year, oil prices have embarked on a rollercoaster ride, experiencing considerable volatility. They plummeted to levels below $72 per barrel in June 2023, only to stage a remarkable recovery, surging to over $96 per barrel by late September. The tug-of-war between improving oil market fundamentals and looming global economic uncertainties has defined the price performance in 2023.
The company’s forward-looking analysis suggests that Brent prices are set to soften in Q4 2023 compared to the highs of Q3, as the supply-demand balance tips in favor of increased production and a seasonally weakened demand. BMI anticipates that gasoline prices will follow a parallel trajectory for the remainder of the year.
Despite the adjustment in Brent prices, the impact is expected to be mitigated by slightly higher average annual crack spreads. Gasoline crack spreads exceeded the company’s expectations during the April-August period, driven by robust demand in the peak driving season. These spreads averaged at $32.4 per barrel over the five months, significantly surpassing our initial projection of $24.8 per barrel.
However, this boost in spreads during the spring and summer months is expected to be offset in large part by a sharp decline in Q4 2023. BMI attributes this decline to weaker-than-expected data on gasoline demand in the United States. In September, the gasoline crack spread averaged USD17.5 per barrel, in line with the company’s forecast of $17.1 per barrel. A notable shift occurred in early October when the crack spread dropped to $7.75 per barrel for the period of October 1-10, marking a staggering 56 percent month-on-month decline, far exceeding our prediction of a 3 percent monthly decline.
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