The Wall Street bank cut its Brent price outlook for the third quarter of this year to $75 from $77.5 a barrel and lowered its fourth-quarter forecast to $70 from $75 a barrel.
Morgan Stanley also reduced its forecasts for 2024 by 5 dollars and now expects prices of 70 dollars in the first quarter, 72.5 dollars in the second quarter and in a range of 75-80 dollars a barrel for the last two quarters of the year. respectively.
“Despite low investment, non-OPEC+ supply has been growing strongly and supplies from Iran and Venezuela have been increasing. We continue to estimate inventory drawdowns in the third quarter, but expect oil price weakness to continue because the focus of the market will change the first half of 2024 when a surplus will appear,” the bank said in a note.
Instead, on supply, major oil exporters Saudi Arabia and Russia have announced a new round of production cuts for August.
The total cuts now amount to more than 5 million barrels per day, which is equivalent to 5% of world oil production. The cuts, coupled with a larger-than-expected drop in US crude inventories based on data from the American Petroleum Institute, provided some support for prices.
“Judging by the Federal Reserve minutes released yesterday, the oil balance is likely to tighten, as are financial conditions,” said Tamas Varga, an analyst at PVM. “Persistent recessionary concerns will likely hinder, but not prevent, oil from rising.”
With information from Reuters