Fitch Solutions Country Risk and Industry Research has upgraded its oil price forecast saying Brent crude to average USD72/bbl and USD73/bbl in 2022 and 2023, respectively, up from USD67/bbl and USD68/bbl previously.
The research house expects prices to enter the new year at around the USD80/bbl mark, supported by the ongoing recovery in oil demand, continued constraints on supply and spill-overs from the broader energy crisis.
It says that his month it has upgraded our oil price forecast. “We now forecast Brent crude to average USD72/bbl and USD73/bbl in 2022 and 2023, respectively, up from USD67/bbl and USD68/bbl previously.”
While it expects prices to enter the new year at around the USD80/bbl mark, it says this is supported by the ongoing recovery in oil demand, continued constraints on supply and spillovers from the broader energy crisis.
Fitch says the macroeconomic backdrop has become somewhat less supportive, as the post-pandemic recovery slows and high energy prices, labour shortages and supply chain disruptions sap the momentum behind growth.
However, Brent has so far shrugged off broader market pressures and will likely find continued support from inflation hedging and the bullish fundamentals for oil.
From 2022, market conditions will become more challenging, as demand growth decelerates and OPEC+, the US and potentially Iran ratchet up large production gains, tipping the market back into oversupply. “We expect prices to relapse during H122, with the glut taking several years to work off in full,” it said.
