It is anticipated that the average Brent crude oil price to hover around US$85 (RM399.17) per barrel for the entirety of 2024. However, to align with this forecast, the price must escalate to approximately US$86 (RM403.89) per barrel in the second half of the year (H2 2024), according to the firm’s latest oil price outlook commentary.
Year-to-date, crude oil prices have held steady at US$83.5 (RM392.15) per barrel.
Maintaining a cautious stance, BMI upholds its estimate for the Brent crude oil price at an annual average of US$82 (RM385.11) per barrel for 2025.
“In light of prevailing market conditions, the balance of risk to our forecast appears tilted towards the downside. However, we are refraining from immediate revisions and instead intend to monitor price developments closely during the forthcoming peak demand period in the northern hemisphere,” BMI stated.
BMI highlighted that oil traders perceive the anticipated US interest rate reductions as conducive to both economic expansion and heightened oil demand, potentially bolstering the Brent crude oil market.
It foresees the US Federal Reserve cutting its benchmark funds rate to 4.75% from the current 5.50% by the end of the year.
Moreover, BMI noted a correlation between Brent crude oil price movements and high-frequency economic data releases over the past 18 months, indicating that deviations from consensus expectations in economic data often corresponded with fluctuations in oil prices.
“The anticipated global real gross domestic product (GDP) growth is expected to maintain relative stability at 2.4% in 2024 and 2.5% in 2025, a slight dip from 2.6% recorded in 2023.
“Geopolitical tensions persist at elevated levels, with no near-term resolution in sight for ongoing conflicts. Consequently, we anticipate continued (albeit sporadic and low-level) risk premiums factored into oil prices,” BMI commented.
However, BMI pointed out the potential supportive role of the US dollar in bolstering Brent crude oil prices.
“We project the US dollar index (DXY) to remain largely range-bound between 100 and 108 throughout the year, in comparison to its current level of 104.
“Diminishing US economic growth and faster-than-expected interest rate reductions may exert downward pressure on the dollar. Nevertheless, heightened geopolitical risks associated with the ongoing US presidential race and generally challenging conditions for risky assets in H2 could propel the greenback higher, consequently lifting oil prices,” BMI elaborated.
Regarding oil demand, BMI forecasts a growth rate of 1.9 million barrels per day for the year, with China and India collectively contributing over 40% to the net global increase in fuel consumption projected for 2024.
“On the supply side, market dynamics remain generally supportive of prices, as the Organization of the Petroleum Exporting Countries Plus (OPEC+) continues its vigilant market management.”
Related topics:
Brent Oil Prices Hover Near $77.18 As Bearish Trend Looms
Brent Oil Prices Continue Decline, Eyeing Further Drops
Brent Oil Prices Are Expected To Fall Further – 3 June 2024 Forecast
