KUALA LUMPUR, Sept 7 — BMI, a unit of Fitch Solutions, maintained its Brent crude oil price forecast unchanged, at an annual average of US$80 (RM374.12) per barrel for 2023, rising to US$83 per barrel in 2024.

While the demand side painted a somewhat mixed picture for oil prices, BMI said it expected the supply side to remain strongly supportive of Brent, with the Organisation of the Petroleum Exporting Countries and its allies (Opec+) as the key to the outlook.

"The most recent rally in oil prices was triggered by the announcement by Saudi Arabia and Russia that they would extend their unilateral curbs on supply, totalling 1.3 million barrels per day until December of this year,” it said in a note today.

Currently, BMI has forecasted for Opec’s output to rise next year, but growth to be relatively moderate at 367,000 barrels per day year-on-year and highly varied across different producers.

BMI noted that many Opec members have limited capacity to raise their output, even as the nominal cuts are rolled back.

It said that while Opec+ maintains tight control over its supply, non-Opec+ production growth has been tapering off as US growth came under mounting strain.

BMI added that inflationary pressures have eased to some extent, as drilling activity has fallen, but input costs remained elevated in historical terms, particularly labour costs.

"While we are forecasting substantial gains in a number of other non-Opec+ markets, including Guyana, Brazil, Canada and China, growth here is also set to soften in 2024, leaving the market relatively well balanced over the year as a whole,” it said.

Setting aside seasonal trends, the research firm said physical oil demand looked set to weaken over the coming quarters, in line with the slowdown in the global economy.

BMI current forecasts put global real gross domestic product (GDP) growth at 2.2 per cent year-on-year in 2024, only marginally below the 2.4 per cent it forecasted for this year

It noted that the economic downcycle is expected to bottom out next year, with growth recovering to a healthy 3.2 per cent in 2025.

"This will mean that many of the current macro uncertainties — such as peak inflation points, terminal interest rate levels, potential US and eurozone recessions and, more broadly, the timing and depth of the global economic slowdown — will be removed from the market next year.

"It is our belief that the macro backdrop will prove less challenging for sentiment in the oil market next year, allowing for some (albeit limited) gains in prices year-on-year,” it added. — Bernama