“A deeper cut would likely be a bullish surprise, but remains a low probability in our view,” the note added.
Citi also said its oil price deck continues to see $86 Brent on average in the second quarter of 2024, but moving into the $70s for the second half of the year and the $60s for 2025.
In the coming months, the geopolitical landscape concerning crude oil, Ukrainian drone strikes, summer heat, and hurricanes impacting refinery operations, pose upward risks until mid-year, the note said.
However, “given progressively softening fundamentals in our view, we continued to look to sell spikes, or point to end-2024 or mid-to-late 2025 downside,” it added.
Oil prices fell more than 1% on Wednesday, retreating for a third straight day, as U.S. Federal Reserve officials rekindled worries about oil demand when they indicated interest rate cuts might be deferred due to sustained inflation.
Earlier in the month, Citi Research had forecast that oil prices would ease through 2024, with Brent crude futures at $86 per barrel in the second quarter of 2024 and at $74 in the third quarter.
(Reporting by Anjana Anil in Bengaluru Editing by Chris Reese and David Gregorio)
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