- Portfolio manager Eric Nuttall expects oil to return to $100 a barrel in 2023.
- The end of coordinated SPR releases, the gradual reopening of the Chinese economy and sanctions on Russian crude could push oil prices up in 2023.
- Bank of America expects Brent crude to quickly cross $90 a barrel on the back of a dovish stance at the US Federal Reserve.
Eric Nuttall, Partner and Senior Portfolio Manager at Ninepoint Partners LP, told the Financial Post that oil prices will return to $100 a barrel in 2023. According to analysts, many of the headwinds that have lowered oil prices this year including will not be politics. China’s own non-coronavirus spread, and coordinated releases of Strategic Petroleum Reserves by several governments, are in 2023. Combined with sanctions on Russian oil and gas, this should drive up oil prices. He also expected the energy sector to continue to outperform other market segments due to the high demand for oil and gas stocks.
Nuttall isn’t the only bull here.
Last week, Bank of America predicted that Brent crude would quickly top $90 a barrel on the back of a dovish drive by the US Federal Reserve and a “successful” economic reopening by China.
Bank of America predicted that Brent crude prices – currently trading at $77.93 – will average $100 a barrel in 2023 thanks to a recovery in Chinese oil demand after the reopening of the coronavirus coupled with a drop in Russian supplies by about 1 million barrels per day. . According to the investment bank, OPEC+ is likely to fully implement a cut of 2 million barrels per day in an effort to boost oil prices.
The forecast came at a time when oil prices have been steadily declining on concerns that a weak global economy may curb demand for the fuel. Last week, Beijing announced the most sweeping changes to its strict Covid-19 guidelines, including easing testing requirements and travel restrictions. Furthermore, people with Covid-19 but only mild or no symptoms are now allowed to isolate at home instead of recovering in centrally managed facilities.
“Our outlook for oil demand and prices for 2023 depends heavily on strong demand growth in China and India, so any delay in reopening Asia could affect the expected price path,The bank said, adding that the path to a post-pandemic environment may not be easy.Given the low levels of immunity in China.”
Crude oil futures have given up nearly all of their gains for the year, posting their biggest weekly losses in more than eight months, as restarting major pipelines eased supply concerns along with lingering concerns about a global recession and weak demand for crude from China.
By Alex Kimani for Oilprice.com
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