An analysis conducted by Standard Chartered highlighted a noteworthy aspect of this year’s oil price surge. In a report dispatched to Rigzone, the analysts noted a scarcity of market bulls amidst the rally. Surprisingly, the forecast by Standard Chartered for Q2 Brent crude oil price at $94 per barrel stands alone among the 34 panel institutions, with the majority offering lower estimates clustered around $83 per barrel. Despite a consistently bullish trend in oil price dynamics and a $15 per barrel rise year-to-date, the prevailing market sentiment has remained surprisingly bearish.
The analysts expressed astonishment at the prevailing pessimism, citing robust fundamentals, low inventories, stable OPEC policies, and heightened geopolitical tensions as factors favoring a more optimistic outlook. They anticipated a potential breach of the $90 threshold for Brent crude in early Q2, citing recent price movements and positive tailwinds such as escalating Middle East geopolitical risks impacting oil markets.
Conversely, Bjarne Schieldrop, Chief Commodities Analyst at SEB, challenged the notion that recent geopolitical turmoil directly drives crude oil price gains. In a separate report to Rigzone, Schieldrop highlighted that headlines of conflict and tragedy in the Middle East have served as catalysts rather than primary reasons for price increases. He emphasized that despite regional unrest, actual oil supply disruptions have been minimal, attributing any price spikes to market tightness and declining inventories.
Schieldrop’s analysis underscored the impact of a constrained global oil market, reduced U.S. shale production, sustained OPEC+ production cuts, and buoyant demand on driving oil prices higher. Drawing attention to macroeconomic optimism and diminishing stockpiles, he posited that these market dynamics, rather than geopolitical events, are the primary drivers behind the current price rally.
Looking ahead, banking on factors like low oil stocks, OPEC+ actions, geopolitical tensions, and economic growth, institutions like BofA Global Research revised their 2024 oil price forecasts upward. On the other hand, BMI maintained its prediction of Brent crude averaging $85 per barrel in 2024, underlining the continued impact of supply risks, geopolitical tensions, and OPEC+ policies on oil price movements.
No comment