The Bank of America expects oil to average $ 100 per barrel in 2023 as demand in China picks up and Russian crude exits the market.
Severe coronavirus lockdowns imposed by Beijing have curbed oil use in the world’s second largest economy this year, but analysts expect restrictions to ease as 2023 approaches.
So far this year, oil demand has slowed to 2 million barrels a day thanks to weak economic growth prospects in the US, Europe and Asia, coupled with rising crude oil prices, following a rapid recovery in 2021 by 6.2 million barrels per day.
As for 2023, Bank of America expects oil demand to grow at an average of 1.7 million barrels per day, which is lower than that of the International Energy Agency, the Energy Information Administration and of OPEC.
The imminent threat of a global recession could send prices below the $ 100 median target, although the price cap for Russian oil could lead to a hike if more barrels of Russia disappear from the global market.
Bank of America analysts indicated that further production stoppages could also occur in Iraq, Nigeria and Libya.
“We expect a small surplus of 0.1 million barrels per day next year, and OPEC + is likely to shed a modest cut, and we also anticipate some shift from gas to oil to provide support for Brent oil and we continue to expect an average price of $ 100 a barrel, “the bank said in 2023 and $ 94 per WTI, with a 12-month target of $ 110 a barrel.”
The rise of the dollar against rival currencies, in particular, has increased the cost of fuel for other countries to buy in local currencies, as this strength has helped slow the growth in oil demand, although some of it is also derived from the sharp rise in global energy prices.
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