Brent crude has dropped under USD 80 / bbl for the first time since prior to the Hamas terrorist attacks on Israel.
UBS remain positive on oil, expecting it to move back between USD 90 and 100. In summary from their note:
- still rising global demand
- still tight supplies
- US Energy Information Administration expects domestic petroleum consumption to fall by 300,000 barrels per day in 2023
- elsewhere ... positive demand signs ... China has stepped up stimulus measures, stronger growth likely to boost energy demand ... oil consumption in India is also rising ... OPEC forecasts demand to grow by more than 2 million barrels per day in 2024 ... International Energy Agency is forecasting growth of 800,000 barrels a day
- Key oil producers have remained disciplined on production, keeping supply tight (Saudi Arabia and Russia say their extra supply cuts will be kept in place for December) ... We believe these voluntary supply cuts are likely to be extended into the first quarter of next year
UBS flag the potential for $110 / bbl
- the risk of a disruption to oil production arising from the Israel-Hamas war has not gone away. Our base case is that the conflict will not escalate. However, events in the region remain fluid. The clearest threat is to Iranian output. Should Iranian crude exports fall by around 300,000–500,000 barrels per day, this could further constrain the already undersupplied market, potentially pushing Brent prices up to USD 100–110/bbl
