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Market News | Brent Oil to Trade Around $70 Per Barrel in Next 12 Months - BCS World of Investments
Oil prices are falling due to China's weak economic stimulus package and Israel's lack of response to Iran's attack on October 1. We expect Brent crude to approach $70 a barrel in the next 12 months unless Iran's exports are disrupted by the conflict with Israel.
Oil prices fell nearly $1 a barrel on Monday morning, driven by the news. China announced stimulus measures on Sunday that were weaker than market expectations. Meanwhile, Israel has yet to show any clear intent to respond to the Iranian attack on October 1, and markets no longer seem to see a reason for a significant risk premium.
We see Brent prices close to $70 a barrel over the next 12 months unless Iran's exports are hampered by the conflict with Israel. However, if Israel decides to counterattack, there will almost certainly be a temporary price spike, with the extent of the impact on Iranian oil exports determining the future dynamics.
Last week, Brent crude rose about $0.30, or 0.4%, to about $78.30 a barrel. Russian Urals crude fell 1.8% to about $72 a barrel. As a result, the Urals benchmark Brent rate rose $1.60 a barrel to about $6.30 a barrel. (Source: Investing.com)
According to Argus, the price of Urals oil on Wednesday was $63.9 per barrel, and Brent oil - $73.9. Thus, over the week, the Urals rate on Brent oil rose from $1.2 to $10 per barrel. Argos analysts note that their estimates of Urals quotes have become noticeably more conservative since the start of the Ukrainian crisis.
The US crude oil market statistics for the week ending October 4 did not have an impact on oil prices. However, production increased by 100 thousand barrels per day to 13.4 million barrels, which was a negative factor for prices. On the other hand, the total period of development of oil and oil products (the ratio of oil and oil product reserves to demand) decreased from 5 days to 78 days, which is a positive factor. Perhaps the support was provided due to increased demand. But this will be determined only in a few weeks. In fact, weekly demand data is unstable, so we need to watch for positive demand dynamics in the coming weeks before concluding that demand will increase.