In an updated consensus by 37 economists and analysts, Brent crude is expected to average $86.15 from September through December 2023, a slight decrease from its current trading price of $86.70. This optimism results from the OPEC+ output cuts anticipated to counterbalance China's dwindling economic growth.
Significantly, the plummeting global crude inventories hint at a constrained oil market. Experts foresee inventory tightening as the primary determinant of prices in the imminent months. Saudi Arabia's influence remains dominant, extending its voluntary 1-million-barrel oil supply cut into October, pushing prices up by 15% within a month. StanChart projects Brent prices might reach an average of $93/bbl in Q4, possibly even eclipsing $100/bbl.
However, there's a cautionary note: John Kemp of Reuters indicates that India's slowing oil demand could exert downward pressure on prices.
On the supply front, while OPEC+ reduced its July output, non-OPEC+ nations, especially the US, Brazil, and Guyana, increased theirs. The EIA predicts a global rise in liquid fuels output of 1.4 million barrels per day in 2023.
Meanwhile, the International Energy Agency (IEA) disclosed a peak global oil demand of 103 mb/d in June, anticipating an annual growth of 2.2 mb/d. But, as the post-pandemic rally slows and the energy transition gains momentum, this growth could drop to 1 mb/d by 2024.
While Q4 2023 seems favorable for a price surge, the inherently volatile oil market necessitates a watchful approach.