BMI Maintains Brent Crude Price At US$81 Per Barrel In 2024

KUALA LUMPUR, Nov 8 (Bernama) -- BMI, a Fitch Solutions company, has maintained its forecast for Brent crude price at US$81 per barrel in 2024, falling to US$78 per barrel in 2025.

In a statement today, it said the trajectory of price action over the coming year will be heavily influenced by three key factors: OPEC+ policy, the outcome of the US presidential election and tensions in the Middle East.

Oil prices have come under significant pressure over recent months, falling from a peak of over US$87 per barrel in the third quarter of this year, to less than US$72 per barrel currently. The decline has not been warranted on a fundamental level, it said.

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"Our own data suggest that the market has remained relatively well-balanced over this period, and high frequency indicators have signalled the same. Rather, the losses have been speculative, as market participants begin pricing in an expected supply glut next year," it said in a note today.

BMI added that the dominant drive of oil price action over the course of next year would be OPEC+ policy, where the group had planned to begin returning cut barrels to market in January 2025.

"This aligns with our own forecast, which saw OPEC+ extending its cuts into the new year in support of prices. Further extensions will be crucial in curbing the anticipated oversupply in the market," it added. 

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However, there were considerable risks to the view where OPEC+ might opt to prolong the extensions into the second half of 2025 or deepen its cuts if market conditions demand it, BMI said.

"However, given that this is unlikely to happen unless prices are weak, the upside risk to our current forecast for Brent is limited," it said, adding that the impact of Donald Trump winning the US Presidential election on the oil market would likely be somewhat limited. 

BMI said although Trump would likely support the domestic oil and gas sector, not least via looser regulation, this is unlikely to materially alter the level of US production growth in the short run.

It noted that the election of Donald Trump has somewhat shifted the calculus in the Middle East region, but there remains considerable uncertainty as to how the nature of US involvement would change and what this means for conditions on the ground. 

"Our core view remains that the wars in Gaza and Lebanon will end in the first half of 2025 and ending these wars will likely be a priority for President-elect Trump. This would erase the conflict-related risk premia, removing a level of support for crude prices," it added.

-- BERNAMA