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Brent crude oil price forecast: BofA, Goldman Sachs, JP Morgan

By: Invezz

The Brent crude oil price rally has faded this week as some investors start to take profits after the recent surge. It was trading at $89.40 on Wednesday morning, a few points below this month’s high of $91.72. 

Oil supply and demand dynamics

The price of Brent is in a bullish trend as investors focus on the supply and demand dynamics. 

Global demand is still rising as economies bounce back. In a statement this week, the EIA noted that global demand will jump to 102.91 million barrels per day this year followed by 104.26 million in 2025.

The IEA, on the other hand, the IEA estimates that global oil demand will jump by more than 1.3 million barrels per day in 2024.

All this is happening at a time when OPEC+ members are implementing voluntary supply cuts in a bid to stabilise the market. EIA estimates that oil supply growth will jump by just 0.5% this year to 104.26 million barrels.

Meanwhile, there are significant risks that the crisis in the Middle East will escalate in the coming months. Iran is said to be planning retaliatory attacks against Israel after the latter killed influential people.

Attacks in the Middle East are also continuing, which is affecting supplies. Further, there are signs that sanctions on Russia are starting to bear fruit as many traders started avoiding cargo from the country. For example, refineries in India have stopped accepting cargoes from some Russian companies.

The key bright spot in the oil market is the United States, which has continued pumping significant amounts of oil every day. Estimates are that the US oil production will jump to over 14 million barrels per day. 

Analysts have a mixed opinion about the Brent oil price action. In a note this week, Goldman Sachs noted that price could continue rising although a jump to $100 will be unlikely. 

Bank of America (BofA) analysts believe that oil price jump will peak at $95 while Morgan Stanley sees it rising to $94. JP Morgan analysts see the price of oil surging to $100 later this year. They wrote:

“At face value, and assuming no policy, supply or demand response, Russia’s actions could push Brent oil price to $90 already in April, reach mid-$90 by May and close to $100 by September,.”

Brent crude oil price forecastBrent crude oil

Oil chart by TradingView

Turning to the daily chart, we see that the price of Brent formed a golden cross pattern recently as the 200-day and 50-day Weighted Moving Averages (WMA) crossed each other.

It also moved above the upper side of the rising wedge pattern and has now retested it. A break and retest pattern is usually a sign of a continuation. Brent’s Relative Strength Index (RSI) has formed an ascending channel.

Therefore, the outlook for the price of oil is bullish, with the initial target being at $95.93, its highest point on September 19th. This price is about 7.30% above the current price. A break above that level will open the possibility of it jumping to $100.

The post Brent crude oil price forecast: BofA, Goldman Sachs, JP Morgan appeared first on Invezz

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