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Fitch Solutions Makes Large Oil Price Revision

Fitch Solutions Makes Large Oil Price Revision

Fitch Solutions Country Risk & Industry Research has raised its Brent crude price projection for this quarter by a significant amount.

Analysts at the company claimed in a fresh research released to Dailion this week that they now expect prices to average $100 per barrel in 2022 and $90 per barrel in 2023. This represents a $18 increase over the company’s previous prediction for 2022 and a $7 increase over its previous forecast for 2023.

“While sanctions have largely avoided oil and gas trade, as we expected, export disruptions appear to be more substantial and longer-lasting than we had previously forecast, not least due to self-sanctioning’ by major Western oil companies under pressure to disengage from Moscow,” according to Fitch Solutions Country Risk & Industry Research analysts.

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“As a result, we have lowered our Russian oil output prediction for this month, which will have an impact on world supplies.” In 2022, we now expect output to fall by 983,000 barrels per day year over year, compared to the 692,000 barrels per day growth we previously predicted. This has largely wiped out the worldwide surplus we expected to emerge this year, indicating a tighter market balance and more persistent upward pricing pressures,” the researchers added.

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The analysts observed in the research that while the outlook’s risks remain “very significant,” they are now more evenly distributed between the upside and downside. Prices are likely to remain “very volatile,” according to the experts, due to increased uncertainty and quick news flow.

“Moreover, huge and frequent price swings are generating difficult trading conditions, with open interest in Brent at its lowest level in seven years,” the analysts wrote in their analysis.

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“Current speculative positioning indicates a high level of market uncertainty,” the analysts said, adding that “weaker liquidity will further increase the volatility in the near term.”

Brent prices have fluctuated in recent weeks, ending at $100.85 a barrel on March 1, $127.98 on March 8, $98.02 on March 16, $120.65 on March 25, and $107.67 on April 1. Brent crude oil was trading at $108.38 a barrel at the time of writing.


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