UBS cut its oil price forecasts for 2024, citing a weaker global demand outlook especially driven by a slowing Chinese economy.
It lowered its price view for both Brent and WTI by $4 to $80 per barrel and $76 per barrel respectively.
“The key downside risks would be a recession, which would in turn raise the risk of a change in OPEC+ strategy and a faster return of production to regain market share, which could bring down prices below our forecast range,” UBS said in its note on Monday.
The bank also lowered its global demand growth by 0.1 million barrels per day (Mb/d) this year.
Both the Organization of Petroleum Exporting Countries and the International Energy Agency lowered last week their demand growth forecasts for 2024.
UBS noted that “the market is just about balanced next year, assuming no unwind” and in the near term, the bank sees it in a deficit in the second half of the year.
“We see the prices at the upper end of the range in case of positive demand growth and better OPEC+ compliance, while prices surging to $90+ would require a material supply impact from escalating geopolitical tensions,” the bank added.
Oil prices were up on Monday as investors weighed ongoing disruption to U.S. Gulf oil infrastructure against demand concerns after a fresh round of downbeat Chinese data ahead of the U.S. Federal Reserve’s interest rate decision this week.
Brent crude futures for November were up 38 cents, or 0.54%, at $72.01 a barrel by 1056 GMT. U.S. crude futures CLc1 for October were up 51 cents, or 0.74%, at $69.16.
Last week, Macquarie cut its oil price outlook for both Brent and WTI oil benchmarks by $2 per barrel to $80 a barrel and $75 per barrel respectively for 2024 citing lower demand especially driven by China.
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