Brent dips on the day while Vitol forecasts highs of $90-100/bbl this year

Front-month ICE Brent has declined by $0.49/bbl on the day, to $83.06/bbl at 09.00 GMT.

PHOTO: Crude oil pump jacks. Getty Images

Upward pressure:

Global oil demand is set to rise by 2.2 million b/d this year, according to an estimate by energy trader Vitol. It also thinks oil inventories will remain stable over the next few months, but simultaneously projects an inventory crunch thereafter.

Brent crude is projected to rise to $90-100/bbl in the second half of this year, Vitol’s chief executive Russell Hardy has told Bloomberg. He thinks oil demand could rise to record levels this year on the back of China's reopening.

Vitol’s global demand growth forecast for this year is roughly in line with forecasts made earlier by the International Energy Agency (IEA) and OPEC. The IEA projects global oil demand to increase by 2 million b/d, while OPEC has estimated it to rise by 2.3 million b/d this year.

Saxo Bank’s commodity strategy head Ole Hansen also expects Brent to climb to $90/bbl this year. This is partly as OPEC members are unlikely to boost oil production in response to the projected demand resurgence, Hansen said at a webinar organised by Gulf Intelligence today.

Downward pressure:

The Bank of America (BoE) has downgraded the risk of a potential oil price spike or energy crisis this year. The bank has also slashed its crude price forecast for this year to $88/bbl from the previous forecast of $100/bbl, partly due to expectations of slower Chinese demand growth.

Oil price gains have been capped amid fears of weaker demand and sentiments of slower economic growth, ANZ commodities strategist Daniel Hynes says. Higher-than-expected US inflation data has raised concerns about more interest rate hikes from the US Federal Reserve, Hynes added.

According to a Reuters analyst poll, US crude oil inventories increased by 700,000 bbls last week – suggesting a possible stock build for 10 straight weeks. Official Energy Information Administration (EIA) figures are set to come out tomorrow.

By Nithin Chandran

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