Oil Falls As Analysts Continue to Debate Market Outlook

It's a 50/50 split between bullish and bearish projections: File Image/Pixabay

Tuesday saw bearish sentiment make a quick return to crude analytical circles, spurred by the familiar worries over global growth which, despite substantial headwinds, remain largely theoretical.

Brent fell 42 cents, or 0.6 percent, to settle at $76.29 per barrel, while West Texas Intermediate fell 41 cents, or 0.6 percent, to settle at $71.74.

Citi on Tuesday stated in a note that weaker demand and stronger non-OPEC supply coupled with potential recessions in the U.S. and Europe could result in lower rather than higher prices later this year.

Plus, the bank said the phenomenon could extend into 2024 despite Saudi Arabia's recent pledge to deepen its output cuts by 1 million barrels per day (bpd): "The likelihood that Saudi Arabia would tackle this on its own on a sustained basis is quite low."

Citi projected the price of Brent to average $81 per barrel through the year.

Dennis Kissler, senior vice president of trading at BOK Financial Securities, was in an equally subdued mood on Tuesday: he told media that the Saudi cuts "will take some supply off the market, but demand will need to continue to rise if we are to see much higher prices."

But as was the case with crude market analysis in general, every downbeat projection seemed to be matched by more positive outlook: UBS analysts forecast Brent prices at $95 per barrel by end of this year and a supply deficit rising above 2 million bpd.

As for OPEC's pledge earlier this week to extend production cuts to the end of 2024, UBS believed this would lead to a global market balance remaining in a "meaningful deficit."

Finally, Kang Wu, head of global demand and Asia analytics at S&P Global Commodity Insights, was equally bullish in his outlook, explaining that a significant rise of global oil demand in the northern hemisphere's summer season would trigger an inventory draw and "support higher oil prices" in the coming months.