Oil prices will creep up from current levels as major producer group OPEC+ maintains restrictions on supplies, but economic headwinds will keep them below $90 a barrel this year, a Reuters poll showed on Wednesday.
A survey of 43 economists and analysts forecast Brent crude would average $84.73 a barrel in 2023, down from the $87.1 consensus in April and current levels of around $73.
Most analysts expect oil to trade around the $80-level per barrel this year, with data and analytics firm Kpler noting that “macroeconomic concerns are a major driver of crude prices this year, overshadowing relatively tight fundamentals.”
The global benchmark has averaged around $80.95 per barrel so far this year.
West Texas Intermediate (WTI) U.S. crude is expected to average $79.20 a barrel in 2023, down from the previous month’s $82.23 consensus.
Worries around robust monetary tightening, bank failures in the U.S., the risk of a U.S. debt default and China’s uneven economic performance have limited the market’s upside even though it falls into deficit in the second half of the year, Matthew Sherwood, lead commodities analyst at EIU, said.
But possible further production cuts from OPEC+, which groups the Organization of the Petroleum Exporting Countries with Russia and other allies, at its June 4 meeting in Vienna, could provide a floor for prices, some analysts said.
“Given the macro uncertainties and fall in oil prices in May, we think OPEC would want to adjust production targets down further, but may have to risk ceding market share to Russia,” Suvro Sarkar, energy sector team lead at DBS Bank, said.
Given conflicting messages on the next oil policy moves from OPEC+, poll respondents were divided on whether the group would push ahead with more output cuts this weekend, or leave production targets unchanged to assess the impact of earlier cuts.
“Even if OPEC+ does not cut in June, the threat of production cuts will remain as long as oil remains significantly below $80 per barrel,” EIU’S Sherwood said.
OPEC+ surprised the market in April with output cuts that briefly drove up oil prices.