Aug 31 (Reuters) – Analysts have raised their 2023 oil price forecasts for the first time in four months with OPEC+ output cuts expected to keep supply tight, offsetting risks to demand from a stalling economic recovery in China, a Reuters poll showed on Thursday.
A survey of 37 economists and analysts forecast Brent crude would average $82.45 a barrel in 2023, up from July’s $81.95 consensus. Brent has averaged around $80.6 a barrel so far this year.
West Texas Intermediate (WTI) U.S. crude is seen averaging $77.83 a barrel this year, above the previous month’s $77.20 forecast.
“Though chances of a deep recession in the West have taken a backseat, the China demand boost expected in the second half of 2023 is probably off the table as well,” Suvro Sarkar, energy sector team lead at DBS Bank, said.
Maintaining oil prices at current levels will require a significant level of supply discipline from the Organization of the Petroleum Exporting Countries and allies led by Russia (OPEC+), Sarkar added.
Most analysts polled by Reuters expect top exporter Saudi Arabia to extend its 1 million barrel-per-day voluntary supply cut, which is in addition to the cuts put in place by the wider OPEC+ group.
That could see global benchmark Brent prices climbing to an average of $85.65 a barrel in the fourth quarter, the poll showed.
“We forecast that the market will fall into significant deficit in the third and fourth quarters of 2023,” said Matt Sherwood, Lead Commodities Editor at the Economist Intelligence Unit.
After tapping strategic petroleum reserves, many governments will need to rebuild stocks, adding to upward pressure on demand, Sherwood added.
Global crude demand is expected to increase by up to 1.7 million barrels per day in 2023, the poll showed.
Most analysts expect the bulk of oil demand growth this year and next will come from Asia and primarily China despite its weakening economy, although some sounded a note of caution.
“China is key for oil demand growth projections,” said Julius Baer analyst Norbert Rücker.
“Given the persisting economic challenges and the anecdotal evidence of amply filled domestic oil storage, we believe that its contribution to growth remains overestimated.”
(This story has been refiled to fix link in the 3rd bullet.)
Reporting by Harshit Verma in Bengaluru, additional reporting by Swati Verma; Editing by Kirsten Donovan
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