$100 Oil To Return In 2023
Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners LP, has told the Financial Post that oil prices will return to $100 per barrel in 2023.According to the analysts, many of the headwinds that have cut short the oil price rally this year including China’s zero-Covid policy and the coordinated SPR releases by several governments, will no longer be there in 2023. Coupled with sanctions on Russia’s oil and gas, this should elevate oil prices. He has also predicted that the energy sector will continue to outperform other market sectors due to high demand in oil and gas stocks. Nutall is not the only bull here. Last week, the Bank of America predicted that Brent could quickly go past $90 per barrel on the back of a dovish pivot in the U.S. Federal Reserve and a “successful” economic reopening by China. BofA has forecast that Brent prices–currently trading at $77.93–will average $100/bbl in 2023 thanks to Chinese oil demand recovery on a post-COVID reopening coupled with a drop in Russian supplies of about 1 million barrels per day (bpd). According to the investment bank, OPEC+ is likely to fully implement a 2 million bpd output cut in a bid to boost oil prices. The forecast has come at a time when oil prices have been steadily declining due to fears that a weakening global economy would curb fuel demand. Last week, Beijing announced the most sweeping changes to its strict Covid-19 guidelines, including relaxing testing requirements and travel restrictions. Further, people infected with Covid-19 but have only mild or no symptoms are now allowed to isolate at home instead of convalescing in centrally managed facilities. “Our oil demand and price projections for 2023 rely heavily on robust China and India demand growth, so any Asia reopening delays could affect our expected price trajectory,” said the bank, adding that the path to a post-pandemic environment may not be easy “given the low levels of immunity in China.” Crude oil futures have surrendered nearly all gains for the year, posting their largest weekly losses in more than eight months, as restarts for key pipelines eased supply concerns coupled with ongoing worries about a global recession and weaker crude demand from China.
U.S. Consumers Get Cheap Gasoline For Christmas
The average price of a gallon of gasoline in the United States fell on Thursday ahead of the Christmas holiday, with prices now 19 cents cheaper per gallon than this time last year. The national average for a gallon of gasoline has fallen four cents this week, to $3.101, despite demand for the fuel increasing last week from 8.26 million bpd to 8.71 million bpd, according to EIA data. Still, that demand figure is still 300,000 bpd lower than this time last year. Gasoline inventories increased by 2.5 million barrels last week to 223.6 million barrels. With gasoline demand failing to rebound to last year’s levels and inventories increasing, prices have come down. According to AAA data, Arizona and Idaho have seen the largest price decreases (18 cents) over the last week. Indiana, Nevada, Ohio, Illinois, and Michigan round out the list of states with the seven largest decreases. Last week’s average gasoline prices in the United States were at $3.193 per gallon. Gasoline prices rose steadily last year—a trend that was exacerbated by Russia’s invasion of Ukraine and the market worry about how Western sanctions would impact crude oil and crude products such as gasoline. Prices have since come down, with gasoline prices easing 50 cents from the $3.636 per gallon that U.S. drivers saw this time last month. GasBuddy’s Patrick De Haan said earlier this week that U.S. gasoline prices could sink to sub-$3 per gallon by Christmas Eve—although there are still 10 cents to fall before reaching that target. “As demand remains low and stocks rise, drivers will likely continue to see pump prices decrease through next year,” AAA said on their website on Thursday.