Latest oil market analysis research findings by the Citigroup Inc, has predicted that oil prices could range between $70 to $80 per barrel in 2024.
The Group, in the report, pointed out that to balance the oil market, the Organization of Petroleum Exporting Countries, OPEC+ will need to maintain its latest oil production cuts throughout next year.
Recently, the OPEC together with its allies announced that it would cut production by a further 900,000 bpd during the first quarter, and may prolong the measures if necessary.
The 23-nation group led by Saudi Arabia will need to do exactly that to keep prices near current levels, the bank said.
Commenting on the market outlook, Citigroup’s global head of commodities research, Max Layton, told Bloomberg TV on Monday: “These cuts do need to be maintained to balance the market through the course of next year.
“They can balance this market and keep prices at $70 to $80 if they all work together”, Layton added
Currently, traders remained unimpressed with the producer group’s pledges, remaining skeptical that it will cut supplies sufficiently to tame a surplus that’s looming in the first half of next year.
As a result, prices had dropped by roughly 10% since the coalition met on Nov. 30, trading near $75 a barrel in London on Monday.
According to Bloomberg Economics, a range of $70 to $80 a bbl may not be high enough for many of the coalition’s members to cover government spending. Saudi Arabia may need a price closer to $100 a bbl.
Layton, who recently succeeded Ed Morse in the role at Citigroup, said that global markets faced a surplus of roughly 1 MMbpd during the second quarter, and about 600,000 bpd during 2024 as a whole, said
He noted that still, much of the latest price move was “done” and the market is likely to be buoyed around $75 a bbl as China — the biggest oil importer — rolls out a “significant” package to stimulate its economy.
Layton further maintained that if OPEC+ were to instead bring back all of their spare oil production capacity, then prices could crash by as much as 50 per cent,.
He lamented that this “alternative is so painful” that OPEC+ is likely to stay the course, since “it’s within OPEC’s grasp to hold the market together.”
