Predicting the Future: Summary of 11 Investment Bank Oil Forecasts

While no one knows the future of fuel prices, there is power in numbers. That’s why it’s helpful to aggregate forecasts together to gain a better understanding of what might happen. Today, we’ll explore bank forecasts from eleven different investing institutions, ranging from Goldman Sachs and Citi to Fitch Solutions and ANZ, to see what 2023 prices may hold.

Looking ahead, the average forecast for this year is $90.54 for crude oil, roughly $15/bbl ($.30 per gallon) above current market levels. The forecast summary, published by Refinitiv, also shows a minimum and maximum forecast of $74/bbl and $103/bbl, respectively.  While the average forecast is above current levels, it could drop in the future as banks adjust their forecasts, as Bank of America did recently.

It is usual for banks and financial institutions to adjust their oil price forecasts based on changing market conditions and geopolitical events. The Bank of America Corp (BofA) has lowered its 2023 Brent crude oil price forecast from $100 to $88 per barrel. This downward revision is based on the bank’s views on both expected Chinese demand and the impact of a Western ban on Russian oil. It is important to mention that, despite the sanction, Russia’s oil exports had grown to 5.1 million barrels per day (bpd) at the end of January from 4 million bpd at the end of August 2022.

Overall, the decision to lower the oil price forecast highlights the complex and ever-changing nature of the oil market. As geopolitical events and economic conditions shift, oil prices are likely to respond accordingly, and banks and financial institutions will adjust their predictions in response.

JP Morgan has predicted that Brent prices are unlikely to reach $100 per barrel in 2023. The bank believes that Russian crude oil production will recover before the end of the first quarter and that high prices would deter the U.S. from repurchasing crude to refill the Strategic Petroleum Reserve (SPR), which will probably force prices to stay below $100 per barrel.

Goldman Sachs also predicts Brent crude will cost $92 and West Texas Intermediate (WTI) will cost $86 per barrel, down from $98 and $92 – its early expectations. Although oil price forecasts have been reduced, Goldman Sachs remains one of the most optimistic banks. In fact, the bank still maintains its belief that a new super cycle is dictating overall market trends, as reported by FuelsNews in Dec 2022.

Oil prices are yet to go up

According to Russell Hardy, the CEO of Vitol Group, the world’s largest independent oil trader, oil prices may reach $90 to $100 per barrel in the second half of 2023. This is due to global demand expected to hit record levels, coupled with a limited supply. He shared this information with Bloomberg.

According to the most recent Reuters poll, with a possible decrease in Russia’s supply and an increase in China’s consumption, the oil market can shift towards a deficit, and Brent crude prices would stay above $90 per barrel in the second half of 2023. West Texas Intermediate (WTI) U.S. crude was projected to average $83.94 per barrel in 2023, below the previous month’s $85.40 forecast.

Several major brokerages are maintaining their late 2022 price forecasts for crude oil, despite recent developments in the market. Morgan Stanley, for instance, has predicted that Brent crude and WTI will each cost $105 and $102 per barrel, respectively.

However, it is worth noting that these forecasts were made before the announcement of the recent growth in Russia’s oil exports. The market conditions can be unpredictable, making it difficult to accurately predict oil prices. While the opinions and forecasts of experts and industry leaders are important to consider, they should be taken with a grain of salt, as unforeseen events and market fluctuations can have a significant impact on oil prices.