ING showed 20% oil price forecasts as there is much more than expected in Russia.
Graph of oil marks Brent at intervals of 1 week
Dutch investment bank ING raised its oil price forecasts by more than 20%, saying Russian production was surprisingly non-existent, as expected, and the French outlook will not print.
ING now expects Brent oil to average $97 a barrel over the past three months, according to the international benchmark. This is 22% less than the bank’s forecast of $125.
The company predicts that oil grades WTIthe US benchmark, will trade at $94 in the fourth quarter, compared to a $122 forecast.
“Russian crude oil production has been better than expected, meaning the oil market is not as tight as it is,” Warren Patterson, chief commodities strategist at ING, said in a note.
“In addition, weaker demand means the oil balance looks more comfortable for the rest of the year.”
Oil prices soared in March after Russia — one of the world’s largest producers of raw materials — picked up a hand-picked source of oil in Ukraine in late February. Traders have jacked up prices in anticipation that Russian production will plummet as Western countries avoid its oil due to government sanctions and “self-sanctions” by the energy company.
However, Russia may increase oil supplies to India and China, while its domestic demand has been strong in recent months. By July, its oil production was just below pre-war levels and higher than for much of 2021, contrary to expectations.
Meanwhile, high oil prices are consumed by people less energy, which is applied to the so-called “consumption destruction”. These summer American drivers bought less gasoline than expected, and China’s industry was consuming less than expected because its economy was tough.
Brent crude is down more than 20% from its June high and is trading at around $95 a barrel on Friday amid worries about the global economy.
Russia simply had no problem redirecting its oil as the world grapples with an inflationary crisis and buyers hunt for cheap trade, according to JPMorgan.
“At the peak of the oil market, it is estimated in the worst-case scenario – a loss of growth of 3 million barrels per day in sharp terms with record high summer demand – when in fact this did not happen,” notes in late July by Natalia Kaneva and other commodity strategies.
However, ING said a coherent plan to phase out the vast majority of oil purchases from Russia by the beginning of this year should lead to an inevitable drop in the country’s production.
The Dutch bank forecasts that oil prices will rise over the next years and it expects Brent crude to average $97 per barrel in 2022 and WTI crude to average $94.
According to Insider
Market Snapshot – ProFinance.Ru news and market events in Telegram
On this topic:
Oil prices to rebound to $125 this year – UBS
Oil falls amid news from China and Iran