Morgan Stanley expects Brent crude prices to receive support to stabilize near $ 80 a barrel, as the oil market is likely to continue to suffer from a deficit in the second half of 2023 before returning to a small surplus next year.
“Strong refined product markets and deep OPEC cuts support crude prices,” analysts at the bank said in a note dated Thursday.
Morgan Stanley raised its forecast for Brent crude prices for the third quarter of the year to $85 a barrel from $75, and raised it for the last quarter to $82.50 from $70. Brent crude was trading at around $84 a barrel today, Friday, according to Reuters.
The bank said that although the production cuts implemented by OPEC will have a positive impact on oil prices in the near future, spare capacity is at its highest level in 20 years, and the group’s decline in market share may negatively affect prices in the longer term.
Saudi Arabia decided to extend its voluntary cuts in oil production by one million barrels per day until September, and the kingdom says it may extend it for a longer period than that and may increase its size.
Morgan Stanley raised its forecast for oil demand in 2023 to 2.1 million barrels per day from 1.8 million barrels.
