Jan 12 (Reuters) – Morgan Stanley expects the oil market to tighten throughout the third and fourth quarter of 2023, supported by a restoration in demand prompted by China reopening its borders amongst different elements.
“We see the oil market coming into stability in 2Q and turning tight in 3Q and 4Q, supporting greater costs later this yr,” the financial institution mentioned in a notice dated Wednesday, with uncertainties like China’s re-opening, restoration in aviation, dangers to Russian provide, slowdown in U.S. shale and the top to SPR releases “turning into tailwinds.”
Though Morgan Stanley predicted Brent costs within the first quarter to stay rangebound round $80-85 per barrel, it noticed costs reaching $110 a barrel by the top of the yr and famous “the availability ceiling continues to be not far-off and inventories are outright low.”
Benchmark Brent crude was buying and selling round $83.04 per barrel on Thursday, after gaining 3% within the earlier session.
“We peg the upside to grease demand in China as a consequence of ‘re-opening’ at near 1 million bpd, to be realised progressively all year long,” the financial institution mentioned, including it anticipated the nation’s re-opening to additionally speed up the restoration in aviation demand.
China scrapped its strict zero-COVID measures final month, lifting lockdowns, eradicating quarantine and halting common testing.
In the meantime, from Feb. 5, the Group of Seven (G7) coalition will impose value caps on Russian oil merchandise to additional cut back Moscow’s income from power exports and its skill to finance its invasion of Ukraine.
Morgan Stanley forecast a disruption to Russian oil provide “approaching 1 million bpd from present ranges” because of the value caps.
Barclays mentioned on Tuesday it remained “constructive” on oil costs, however cautioned {that a} worsening in world manufacturing exercise might pose a draw back danger to its present $98 per barrel Brent value forecast for 2023.
Reporting by Kavya Guduru in Bengaluru;Modifying by Elaine Hardcastle
Our Requirements: The Thomson Reuters Belief Ideas.
