Morgan Stanley analysts cut oil price forecasts

MOSCOW, September 13 – PRIME. Analysts are lowering oil price forecasts for the remainder of the year amid fears of a recession in major economies and China’s ongoing fight against the coronavirus.

Morgan Stanley and UBS lowered short-term forecasts for oil prices due to the deteriorating external background and continued supplies from Russia to Asia and other regions.

Brent oil prices have fallen by about a third from their peaks in early March. Quotes may continue to decline in the coming months, although they may rebound next year on the back of economic recovery and reduced supplies of Russian oil.

Morgan Stanley revised down its short-term forecast for Brent prices due to accelerating inflation and a sharp slowdown in demand, analysts at the bank, including Martin Rats, said.

The bank lowered its forecast for the price of Brent oil in the 3rd quarter of 2022 by $12 per barrel, to $98 per barrel and lowered the estimate for the 4th quarter by $5 per barrel, to $95. Meanwhile, Morgan Stanley left its quarterly forecasts for 2023 unchanged at $100 and higher, believing that prices will rise from the 2nd quarter.

Oil supplies from Russia may be significantly reduced: according to the bank, in early 2023, exports from Russia may fall by 1.5-2 million barrels per day.

UBS Group lowered its forecast for Brent oil by $15 by the end of the year to $110 a barrel amid lockdowns in China and still high exports from Russia, analysts at the bank, including Giovanni Staunovo, said.

Lockdowns in China are likely to slow down the recovery in demand in the short term, despite the rise in imports in August.

Oil exports from Russia have been more robust than expected, with shipments to European countries such as Italy still strong.

Brent oil prices are expected to hit $125 a barrel by the end of September 2023 as supply becomes tighter as strategic reserves draw down and demand for oil from power plants picks up.

Goldman Sachs Group Inc expects Brent oil prices to reach $125 per barrel in 2023 amid the introduction of a cap on Russian oil prices, analysts at the bank, including Damien Courvalin, say. It is expected that in this case, the supply of Russian oil will fall by 1 million barrels per day compared to levels observed before the start of the special operation.