Morgan Stanley Raised Oil Price Forecast for Q1 2023

Morgan Stanley expects oil market deficit to widen further in Q1 2023.

SEATTLE (Oil Monster): Manhattan, New York City-headquartered multinational investment management and financial services firm Morgan Stanley has lifted its price forecast for oil for the initial quarter of 2023. The forecast for Brent crude oil prices were raised from $95 per barrel to $100 per barrel.

The firm foresees tighter oil supplies going forward, primarily on account of massive output cut by members of the Organization of Petroleum Exporting Countries (OPEC) and allies including Russia. It must be noted that OPEC+ had announced 2 million barrels per day (bpd) cut in oil production Wednesday. The embargo by the EU countries on Russian production too are likely to squeeze supply in the coming months, it noted.

Morgan Stanley expects oil market deficit to widen further in Q1 2023. It now sees the deficit at around 0.9 million bpd, as compared with the earlier forecast of 0.2 million bpd. The above forecast is based on the assumption that Russian oil output will decline by 1-1.5 million bpd, once the EU oil import embargo goes into effect.

Other firms too shared bullish price outlook on oil. For instance, Goldman Sachs has raised its price forecast for Brent crude this quarter by $10 to $110 per barrel. Meantime, strategists at ING notes that the output cut will result in a large deficit oil market over the whole of the next year.