Barclays lowered on Friday its Brent Crude price forecast for this year and next due to expected slowing growth in oil demand.
The UK bank—which slashed in August its Brent oil price forecast to $103 per barrel for 2022 and 2023, down from $111 a barrel—is now cutting its Brent forecast by $3 per barrel for 2022 and by $5 a barrel for 2023, CN Wire reports, citing Barclays.
However, the bank remains constructive with respect to the curve and consensus of oil prices.
Yet, if 2023 global oil demand is 1-2 million barrels per day (bpd) lower than expected, there is a downside of between $15 and $25 per barrel in Barclays’ price forecast for next year, the bank said.
If the “zero-Covid” policy and the situation with the sudden lockdowns in China don’t improve, this will imply a $5-$10 per barrel downside to the Barclays forecast for 2023.
Moreover, “oil demand could undershoot our estimates despite a potential easing of mobility restrictions due to a broader slowdown,” the bank was quoted as saying.
On Thursday, oil prices rose at intraday trade after China signaled an easing of its strict Covid policy, which has battered market sentiment in recent months.
Just this past Sunday, Chinese President Xi Jinping signaled that the country’s zero-Covid policy would remain in place for the time being.
But the Chinese city of Xi’an, home to more than 13 million residents, has said it would implement Covid control measures only in risk areas instead of city-wide “static management,” CN Wire reported on Thursday, citing the city’s health authorities.
In addition, officials in China are discussing the idea of reducing the mandatory quarantine for travelers into China to seven from 10 days, Bloomberg News reported on Thursday, quoting sources with knowledge of the discussions.
Oil prices settled almost flat on Thursday as market participants focused again on fears of recessions that could slow oil demand, and were headed to a second consecutive weekly loss on Friday.
By Tsvetana Paraskova for Oilprice.com
