According to investment bank UBS, Brent Crude oil prices are expected to remain at the higher end of the trading range between $60 and $70 per barrel. This assessment comes as the market experiences tight conditions during the peak summer demand season. In a note released on August 4, 2023, analyst Giovanni Staunovo stated that global oil demand is projected to peak this month before experiencing a modest decline in the following months.
UBS anticipates that oil prices will gradually drop towards the lower end of the range later this year as supply continues to increase. With demand expected to weaken in the fourth quarter, Staunovo noted, “With supply in South America still expected to increase a bit more, we see the oil market better supplied over the months ahead.”
As of early Friday, Brent Crude was trading above $67 per barrel, while the U.S. benchmark, WTI, was above $63 per barrel. According to energy trade flow analysts at Vortexa, global crude oil exports remain strong and are exceeding the latest ten-year seasonal average.
The summer season has witnessed increased demand from South America, particularly due to rising supply from Brazil and Guyana, alongside production hikes in the Middle East as OPEC+ continues to ease output cuts. Despite concerns that the rapid unwinding of production cuts from key OPEC+ members could lead to an oversupply, this scenario has not yet materialized. Mark Toth, an analyst at Vortexa, commented on the current state of global crude shipments, highlighting that fears of oversupply have not effectively transpired.
Analysts have begun to observe signs in the market indicating that traders are anticipating an abundance of supply once the peak summer travel season concludes. As the situation unfolds, the oil market’s dynamics will continue to be shaped by both supply increases and shifts in demand.
Overall, the outlook for Brent oil prices remains influenced by the interplay of these factors, with UBS’s prediction of sustained high prices reflecting the complexities of the current market environment.
