According to Citi Research, the investment bank continues to expect that OPEC+ will hold its production cuts through the third quarter of 2024. However, the research note suggests that a deeper cut would be a “bullish surprise” but remains a low probability.
Citi’s oil price forecast sees Brent crude averaging $86 per barrel in the second quarter of 2024, but moving into the $70s for the second half of the year and the $60s for 2025.
The research note highlights that in the coming months, the geopolitical landscape, Ukrainian drone strikes, summer heat, and hurricanes impacting refinery operations pose upward risks to oil prices until mid-year. However, the analysts say that given the “progressively softening fundamentals,” they continue to look to sell price spikes or point to end-2024 or mid-to-late 2025 downside.
Oil prices fell more than 1% on Wednesday, retreating for a third straight day, as U.S. Federal Reserve officials rekindled worries about oil demand when they indicated interest rate cuts might be deferred due to sustained inflation.
Earlier this month, Citi Research had forecast that oil prices would ease through 2024, with Brent crude futures at $86 per barrel in the second quarter of 2024 and at $74 in the third quarter.