Oil rally will stall as recession risks thwart supply tensions, poll shows

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By Brijesh Patel

(Reuters) – A rise in oil prices could stagnate as recession fears and COVID outbreaks in China dampen demand and counter supply risks from Russia sanctions and OPEC production constraints +, a Reuters poll showed on Friday.

A survey of 35 economists and analysts predicts Brent oil will average $105.75 a barrel in 2022, down from a forecast of $106.82 in June, marking the first downward revision to the monthly survey since April. .

The global benchmark has averaged around $105 a barrel this year. [O/R]

“The focus is shifting slightly from supply disruptions to destroying crude demand due to global recession fears,” said Edward Moya, principal analyst at OANDA.

Demand growth forecasts for this year have also been reduced to a range of 1.4 to 2.5 million barrels per day (bpd), from 2.3 to 5 million bpd in the previous survey.

Rapid interest rate hikes by major central banks, coupled with travel restrictions in China, the world’s biggest crude importer, have clouded the outlook for oil demand, analysts said.

However, Western sanctions on Russian and OPEC+ oil producers keeping a leash on supply will put a floor under prices, analysts noted.

“We still believe the war in Ukraine and the tight market will drive prices down in the near term, with the Dated Brent price trading in the $100-$120 per barrel range for the remainder of the year,” Matthew Sherwood said. , commodities analyst. at the UIA.

US crude was estimated at $101.28 a barrel in 2022, down from the June consensus of $102.82.

The next meeting of the Organization of the Petroleum Exporting Countries and its allies including Russia, collectively called OPEC+, is scheduled for August 3 and will be closely watched as their current production pact expires in September and the United States has intensified their calls for increased production. .

“OPEC and the United States in general would like to continue to increase production in the short term, but there are limits to the rate of increase and production growth is unlikely to be faster than the expectations of the market,” said Suvro Sarkar, an analyst at DBS Bank.

(Reporting by Brijesh Patel in Bengaluru; Editing by Arpan Varghese, Noah Browning and Jason Neely)

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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