Fitch Ratings revised up its oil price predictions for 2024 by $5 a barrel, attributing to the supply cuts by OPEC+ oil producing countries led by Saudi Arabia and Russia.
The rating agency increased its 2023 price forecast to $82 a barrel from $80 a barrel for Brent and raised West Texas Intermediate (WTI) oil prices to $78 a barrel from $75 a barrel.
The agency forecast that Brent price would average $85 a barrel in 2024, up from $80 a barrel in its previous estimate, while the forecast price of WTI increased from $70 a barrel to $75 a barrel.
“The increased Brent and WTI oil benchmark assumptions for 2024 are supported by OPEC+’s continued attempts to support oil prices, including the recent decision by several members to join Saudi Arabia and Russia in implementing additional cuts in 1Q24,” the agency said.
Recalling that OPEC+ official quotas would also be extended into 2024, the agency cited data by International Energy Agency (IEA) and warned that about 1.2 million barrels per day (bpd) market deficit was expected in the second half of 2023
'OPEC+’s additional curtailments suggest that the deficit could persist in the first half of 2024, provided that compliance with production cuts remains strong,” it added.
Noting that Russian export volumes remain fairly resilient despite sanctions, the agency said, “US shale production growth will moderate to 400,000 bpd in 2024 from 1.5 million bpd in 2023, according to the EIA, as companies priorities dividends and deleveraging over expansionary investments.”
According to the statement, increased demand in China, the world's second largest oil consumer, is attributable to the country’s post-pandemic recovery and “the growth rate in demand in China and India will slow down next year.”
The agency expects “crude prices to converge with our mid-cycle assumptions over time as OPEC+’s policies become less efficient, a geopolitical premium subsides and demand growth continues to decelerate.'
Reporting by Sibel Morrow
Writing by Handan Kazanci
Anadolu Agency
energy@aa.com.tr