Oil 2024: Black Swans, But More Demand Growth Monday
https://trendmacro.com/system/files/reports/2024122trendmacrowarren-st.pdf
Monday, January 22, 2024
OPEC+ will navigate growing demand, and the possibility that peace breaks out in Israel.
Oil
Our 2023 forecast for global demand growth was almost perfect, and our forecast for the price range was good but not great. For 2024 we forecast 2 million barrels per day in global demand growth, down somewhat from 2023 because the world has by now significantly put the Covid lockdowns behind it, but well above consensus. We forecast production growth in the US at 300,000 barrels, now that drilled and uncompleted wells are significantly reduced. There is an indeterminate risk premium in crude prices against the possibility of expanded disruption of Middle East shipping. But this is only a black swan risk, and we don’t think the worst case will materialize. If our demand forecast is right, OPEC+ would seemingly have the scope to pare back its production cuts, while seeking a price in the high $80’s. But if the Israel/Hamas conflict winds down and its associated risk premium bleeds away, the cuts would be more likely to stay. Either way, our price forecast for 2024 is a range from $70 to $85 for the Brent benchmark.