Brent crude futures settled above $90 on Tuesday, for the first time this year. In the end, the extension of Saudi’s 1 mbd supply cut alongside Russia’s 300 kbd reduction in exports for an additional three months was needed to get the price there. Although we hold a constructive view on oil prices in the short term, we still don’t see oil prices breaching $100 in 2023, absent a major geopolitical event. As the market transitions from a large inventory draw in 3Q23, most visibly in the US, into a slight surplus in 4Q23 and 2024, prices should ease back toward the mid $80s. Both demand and supply will likely contribute to looser balances in the final quarter of the year, but the key to our lower price forecast is our outlook on the trajectory of demand in 4Q23. The softening in balances should be seen first in forward looking prices: in crude differentials for October loadings and softer structure at the front. 

 

SpeakerNatasha Kaneva, Head of Global Commodities Research 

 

This podcast was recorded on 8 September 2023.

This communication is provided for information purposes only. Institutional clients can view the related report https://www.jpmm.com/research/content/GPS-4499993-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.