Oil will rebound after recent banking turmoil as demand from top consumer China is set to soar, but worries around economic growth will keep both benchmarks hovering below $90 this year, a Reuters poll showed on Friday.
A survey of 45 economists and analysts forecast benchmark Brent crude would average $86.49 a barrel this year, down from February’s estimate of $89.23.
Brent is currently trading around $80, having been dragged to 15-month lows near $70 earlier this month on mounting worries over the stability of the banking sector. Those fears have since largely been allayed by institutional rescue measures for struggling banks.
“Fundamentals for the oil market do not seem to have changed meaningfully in light of bank runs in the U.S. and the forced takeover of a Swiss bank,” said Suvro Sarkar, energy sector team lead at DBS Bank.
“The dip in oil prices is more of a blip at the moment, rather than a sustained move below $80 per barrel”.
Analysts forecast U.S. crude to average $80.88 a barrel in 2023, down from the $83.94 consensus last month, but still above current trades of around $74.
Most analysts polled by Reuters expect oil prices to stay below $90 on fears of a recession in developed economies stemming from interest rate increases to bring down inflation.
Global oil demand is seen rising by about 1 million-2 million barrels per day (bpd) in 2023, with dips related to economic jitters or slowdowns in the West likely to be countered by increases from China, the world’s biggest oil importer.
“Oil demand in China should pick up a bit further over the year. And while U.S. demand should slow, it won’t fall, even as the economy weakens under the weight of higher interest rates,” Capital Economics’ Bill Weatherburn said.
Along with China, prices will also hinge on potentially declining Russian oil production due to Western sanctions, with a combination of the two likely tightening global supplies, analysts said.