The prices of oil may move towards $100 “for a short while” despite the cuts in output and geopolitical tensions, but they will likely retreat by the end of the year, as per the analysts in Wall Street.
“The Saudi appetite to withhold oil from market, supported by Russia maintaining a certain level of export constraint, points to higher prices in the short term, all else equal, but $90 prices look unsustainable given faster supply growth than demand growth ex-Saudi/Russia,”
the Global Head of Commodity of CitiBank, Ed Morse and his team told the investors.
“Higher prices in the near term could make for more downside for prices next year,”
he further added.
Crude is been towards an up trend over the last three months. West Texas Intermediate has increased by about $23 each barrel since the late of June to above $91 on Monday.
Brent crude futures have witnessed an indistinguishable increase of more than a total of 30% over the same time, which is recently hovering above $94 each barrel.
“After the recent spike, these inventory dynamics should keep a lid on crude oil prices for the remainder of 2023 and 2024. And Saudi Arabia may yet reverse cuts if markets get too tight,”
the note further mentioned.
In the early days of August, Saudi Arabia had expanded its unilateral cuts in production, and Russia lowered its exports through the year-end. These cuts are an addition to the OPEC+ reductions that were announced last year.
“The notion of $100/bbl has evolved from completely unimaginable a few short months ago, to within striking (or hyping) distance today,”
analysts Helima Croft and Michael Tran wrote to the investors.