Crude Oil Set for Another Weekly Gain as Morgan Stanley Raises Forecast
Oil prices continued to advance on Friday, closing in on an 11th weekly gain in the past 13 weeks. In the wake of the rally, analysts at Morgan Stanley raised their 2023 and 2024 quarterly forecast for Brent oil prices, although a jump toward $100 per barrel is not very likely, they added.
Crude Oil Prices Up 35% Since June-end
Crude oil prices are set to record yet another weekly gain on Friday, although analysts remain divided on whether this rally is likely to continue for much longer. Notably, Brent crude advanced over 1% on the day to $94.32 per barrel, while the WTI climbed to $90.55.
Assuming that prices retain these gains, it would mark an 11th weekly surge over the past 13 weeks.
The relentless rally follows a combination of factors, including recent supply cuts from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, China’s recovery from the COVID-19 pandemic in 2022, and a resilient US economy driven by solid consumer spending. These factors have triggered a 35% rally in WTI and Brent crude futures since late June, when prices were trending below the $70 mark.
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Morgan Stanley Hikes Oil Price Forecast But $100 Mark Seems ‘Stretched’
On Wednesday, Morgan Stanley hiked its quarterly forecast for Brent oil prices in 2023 and 2024, citing a supply deficit triggered by the recent extension of production cuts from Saudi Arabia and Russia. The bank believes the shortage will keep oil prices around the current levels, while a move beyond $100 a barrel – as some predicted – would seem “stretched.”
The last time US crude oil prices were trading above $100 a barrel was over a year ago, fueling inflation levels to 4-decade highs. In contrast to Morgan Stanley’s views, Chevron CEO Mike Wirth was more convinced that crude prices could soar to triple digits in the coming months, mainly due to growing supply constraints.
“Supply is tightening, inventories are drawing. These things happen gradually and you can see it building, and so I think…the trends would suggest that we’re certainly on our way.”– Wirth said.
Wirth also warned that a jump toward $100 could cause a “drag on the US economy; however, he added that the harm would not be very significant.
Do you agree with Morgan Stanley’s predictions that a jump to $100 per barrel for oil prices does not seem very likely now? Let us know in the comments below.