BofA expects oil price at $90 in 2024 as markets remain balanced

BofA expects oil price at $90 in 2024 as markets remain balanced

Brent crude price is forecast at $90 per barrel next year with oil supply and demand likely to remain roughly balanced, BofA Global Research said in a note on Wednesday.

For WTI, the analysts expect price to be $85 per barrel next year.

Saudi Arabia’s voluntary production cuts of 1 million barrels per day (bpd) and Russia cutting August exports by 500,000 bpd have pushed oil prices above $80 per barrel. On Wednesday, Brent crude futures traded on ICE at $84.8 per barrel. However, China's sluggish economic growth is also weighing on expectations of demand recovery.

BofA said any move above $100 would require deeper OPEC+ supply cuts which are unlikely, unplanned supply disruptions or stronger demand conditions which are unexpected given a moderate GDP growth forecast.

BofA economists expect world GDP rising 3% in 2023 and expanding by 2.8% in 2024.

In addition, the correlation of oil to GDP is not as strong as they used to be and OPEC+ now has more spare capacity due to the deep cuts it just implemented, the report said.

"On this point, to offset a partial unwind of the Saudi "lollipop cut" next year would likely require global GDP growth of 3.5% to 4% in 2024, 0.7% to