Tough macroeconomy seen impacting oil prices in 2023

A new poll from Reuters shows traders counting on crude undergoing minor price increases this year.
Photo: Ap Photo/hasan Jamali, File
Photo: Ap Photo/hasan Jamali, File

Oil prices climb in this year’s first trading day, Monday, without any factor of greater force noted as affecting the market.

Price increases here fall well in line with a poll taken by Reuters showing surveyed traders expecting oil prices to rise modestly during 2023.

A barrel of European reference oil Brent trades for USD 85.91 Monday morning CET against USD 84.08 Friday afternoon. US benchmark crude West Texas Intermediate sells at the same times for USD 80.26 against USD 78.84.

According to the poll results, macroeconomic factors and Covid-19 contagion spreading in China are likely to cut into fuel demand, while a forecast decline in Russian crude output owing to Western sanctions will probably decrease supply.

The survey shows 30 polled economists and analysts expecting this year’s Brent price to average USD 83.37 a barrel, or 4.6% under level forecast in November. The WTI outlook here is down to USD 84.84 per barrel against USD 87.8 from estimates compiled a month prior.

Many analysts predict that that oil demand will jump in the second half of 2023 due to China’s policy shift on Covid-19 restrictions. Moreover, Western sanctions on Russia’s crude export are projected as having a limited impact.

”In the event of a severe drop to Russian exports (which we do not expect to occur), OPEC+ will likely be ready to increase output to prevent prices from rising too high,” the news agency cites data and analytics firm Kpler noting.

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