Crude oil prices to slump to as low as US$70 a barrel next year due to sluggish demand and as “peak transport fuel demand” looms, according to US bank Citigroup.
Prices have been rising steadily (to US$92 currently) since the middle of the year as key producers Saudi Arabia and Russia have cut production.
Citi, though, sees the global market swinging back to a surplus next year and that will pull crude rice back to around US$70 a barrel on average.
Concern has been rising among economists that the recent price spike might lead to a resurgence in inflation led by petrol and other fuel prices, especially if the price topped US$100 a barrel.
Ed Morse, Citi’s head of commodities research, however, sees things going the other way.
“Demand looks constrained as the pandemic recovery factors continue to ease off and peak transport fuel demand looms, while supply is growing in non-Opec+ suppliers.”
This downward move should start towards the end of the current quarter, he predicts, and carry on further in 2024.
Brent crude currently is US$92.94 a barrel.