Morgan Stanley announces increase in oil prices due to number of factors
2023.01.12 06:45
Morgan Stanley announces increase in oil prices due to number of factors
By Kristina Sobol
Budrigannews.com – (NYSE:) Morgan Stanley expects a tightening of the oil market in the third and fourth quarters of 2023, aided by a recovery in demand brought on, among other things, by China reopening its borders.
The bank stated in a note dated Wednesday that “we see the oil market coming into balance in 2Q and turning tight in 3Q and 4Q, supporting higher prices later this year.” The bank cited “turning into tailwinds” uncertainties such as China’s re-opening, aviation recovery, risks to Russian supply, a slowdown in U.S. shale, and the end of SPR releases.
Morgan Stanley said that Brent prices would remain between $80-85 per barrel in the first quarter, but that they would reach $110 per barrel by the end of the year and that “the supply ceiling is still not far away and inventories are outright low.”
On Thursday, Benchmark gained 3% over the previous session to trade around $83.04. O/R] The bank stated, “We peg the upside to oil demand in China due to’re-opening’ at close to 1 million bpd, to be realized progressively throughout the year,” and it anticipated that the country’s reopening would also accelerate the recovery of aviation demand.
Last month, China ended its rigorous zero-COVID policies by lifting lockdowns, removing quarantines, and stopping regular testing.
In the meantime, beginning on February 5, the Group of Seven (G7) coalition will impose price caps on Russian oil products in an effort to further limit Moscow’s ability to finance its invasion of Ukraine and its revenue from energy exports.
Due to price caps, Morgan Stanley anticipated a disruption in Russian oil supply “approaching 1 million bpd from current levels.”
Barclay’s (London:) said on Tuesday that it remained “constructive” about oil prices, but that a rise in global manufacturing activity could hurt its current 2023 Brent price forecast of $98 per barrel.
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