By Alex Kimani – December 21, 2022 3:00pm CST
- Portfolio manager Eric Nuttall sees oil returning to $100 a barrel in 2023.
- The end of coordinated SPR releases, the gradual reopening of China’s economy and sanctions on Russian crude could lift oil prices in 2023.
- Bank of America forecast Brent could quickly surge above $90 a barrel on a dovish turn from the US Federal Reserve.
Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners LP, has told the Financial Post that oil prices will return to $100 a barrel in 2023. China’s zero-Covid policy and coordinated SPR releases by multiple governments will not in 2023 give more. This, coupled with sanctions on Russia’s oil and gas, should push oil prices higher. He has also predicted that the energy sector will continue to outperform other market sectors due to high demand for oil and gas stocks.
Nutall isn’t the only cop here.
Last week, Bank of America forecast that Brent could quickly surge above $90 a barrel on the back of a dovish turn from the US Federal Reserve and a “successful” economic reopening by China.
BofA has forecast Brent prices – currently trading at $77.93 – to rise by about 1 million barrels per day in 2023 thanks to a rebound in Chinese oil demand following a post-COVID reopening coupled with a drop in Russian supplies (bpd) will average $100/bbl. . According to the investment bank, OPEC+ is likely to fully implement a production cut of 2 million barrels a day to boost oil prices.
The forecast came at a time when oil prices have been falling steadily on fears that a slowing global economy would curb fuel demand. Last week, Beijing announced the most sweeping changes to its strict Covid-19 guidelines, including easing testing requirements and travel restrictions. In addition, people who are infected with Covid-19 but have only mild or no symptoms are now allowed to isolate at home instead of recovering in centrally managed facilities.
“Our oil demand and price forecasts for 2023 are heavily dependent on robust demand growth in China and India, so delays in Asia’s reopening could affect our expected price trajectory,” the bank said, adding that the path to a post-pandemic environment may not simply be “given the low level of immunity in China.”
Crude oil futures gave up almost all gains for the year, posting their biggest weekly losses in more than eight months, as the restart of key pipelines eased supply concerns linked to ongoing worries about a global recession and weakening crude demand from China.
By Alex Kimani for Oilprice.com
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