In a recent analysis, Citigroup Inc. has forecasted a potential alleviation in global oil prices, attributing the anticipated relief to a surge in supply originating from nations outside the Organization of Petroleum Exporting Countries and Russia, excluding OPEC+ leaders Saudi Arabia and Russia. Noted analysts, including Ed Morse, emphasized that while technical trading patterns and geopolitical uncertainties might briefly propel prices upwards, the augmented supplies are anticipated to curtail the costs of critical fuels like gasoline and diesel.
On Monday, Brent crude inched towards $95 per barrel, propelled by production curtailments led by Saudi Arabia and Russia, which have successfully depleted inventories. Simultaneously, sustained global consumption has further bolstered the market. Refineries capitalizing on robust margins have contributed to the escalation of physical barrel premiums.
Beyond the dominion of these major oil producers, Citigroup foresees an additional 1.8 million barrels per day entering the market from countries including Canada, Brazil, Argentina, Guyana, and Norway. Projections indicate the United States will contribute an additional 900,000 barrels daily within this year, followed by an estimated 400,000 barrels daily in the subsequent year.
Available data pertaining to global oil supply suggests that the existing $90 price range may no longer be sustainable. This potential shift is poised to offer respite to consumers, as the costs of gasoline and diesel are projected to dwindle. Nevertheless, prevailing circumstances might still lead technical traders and geopolitical risks to temporarily surge prices beyond the $100 threshold.
With consistent global consumption and an upsurge in worldwide oil supplies, Citigroup Inc. predicts a forthcoming moderation in global oil prices. This development is anticipated to alleviate the financial burden on consumers, particularly in relation to essential fuels like gasoline and diesel. While the influence of technical trading strategies and geopolitical uncertainties may momentarily elevate prices above the $100 mark, the augmented supply is anticipated to sustain a downward pressure on prices in the foreseeable future.
Source: Bloomberg
