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Despite the geopolitical risk premium, oil prices are set to remain under pressure, weighed down by slower-than-expected demand and uncertainty about OPEC+’s unwinding of the production cuts, according to the analysts in the monthly Reuters poll who cut their price forecasts for a fifth consecutive month.
In last month’s poll, weaker Chinese oil demand and high inventories globally prompted economists and analysts to cut their estimates of oil prices this year.
This month’s poll also showed further reductions in oil price forecasts, by more than $1 per barrel for both benchmarks.
Brent Crude prices are now expected to average $81.52 per barrel this year, according to analysts in the Reuters survey. That’s down from the $82.86 a barrel forecast from August and the lowest average 2024 forecast the analysts in the poll have had since February.
The U.S. benchmark, West Texas Intermediate crude, is currently expected at an average of $77.64 per barrel for 2024, down from the forecast of $78.82 a barrel in August.
Early on Monday, WTI traded at around $68 per barrel, and Brent Crude prices were at $71 a barrel, as the market looks to have largely factored in the higher geopolitical premium coming from the Middle East.
According to the analysts polled by Reuters, the market is concerned about the trend in China’s demand and whether the new stimulus measures would boost fuel consumption.
Moreover, analysts also expect that OPEC+ would go ahead and begin unwinding the production cuts in December – as the current plan is – despite the fact that global oil demand may not warrant additional supply on the market.
Sufficient supply in recent months has eased the geopolitical risk premium, some of the analysts polled by Reuters said.
These risks can return if the war escalates further, but for now, the lack of a direct threat to oil supply, and the prospect of more supply coming on the market in two months, are keeping oil prices subdued.
