Wall Street Is Already Cutting Oil-Price Forecasts For This Year
(Bloomberg) -- The oil market is starting the year with a worrying message from Wall Street.
Morgan Stanley cut forecasts for Brent crude prices this year by about 9% to around $77 a barrel on Wednesday — implying very little upside potential from current levels. In Europe, UBS Group AG has also downgraded its outlook, a few weeks after Goldman Sachs Group Inc. did the same.
Analysts expect that surging supplies from outside the OPEC cartel, led by US shale drillers, will be enough to satisfy growth in global oil demand, which is set to slow markedly this year as the post-pandemic rebound loses steam. Brent futures traded near $79 a barrel on Thursday, and just capped their first annual decline since 2020.
“Looking ahead, we expect a relatively precarious balance in 2024,” Martijn Rats, global oil strategist at Morgan Stanley, said in a report. “Despite low investment in production capacity in recent years, the growth in non-OPEC supply is nevertheless set to remain strong.”
Among five big Wall Street banks, only Bank of America Corp. now anticipates significant gains this year, forecasting an average of $90 a barrel. Citigroup Inc. remains the most bearish, predicting an average of about $75 a barrel. An average of the five annual projections comes to about $81.
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