Morgan Stanley Slashes Q1 2022 Brent Crude Price Forecast on Omicron Risks

Seher Dareen and Arpan Varghese
Monday, November 29, 2021

Morgan Stanley on Monday cut its first quarter 2022 Brent crude price forecast to $82.50 per barrel from $95 on market expectations that the Omicron coronavirus variant could turn into a major headwind for oil demand.

The market appears to be pricing in the possibility that the new variant could prompt restrictions and cut oil demand, amid expectations of oversupply driven by planned release from the Strategic Petroleum Reserve adding to monthly output from the Organization of the Petroleum Exporting Countries and allies (OPEC+), the bank said in a note.

Oil rebounded by almost 5% on Monday to $76 a barrel as some investors viewed Friday's more than 10% slump in oil on concern about the Omicron coronavirus variant as overdone.

But while the beginning of next year could see excess supply, spare oil capacity was likely to be eroded by the end of 2022 as inventories draw down further from already low levels.

OPEC+ may not increase supply by 400,000 barrels per day (bpd) since the group does not have the capacity to do so, nor the incentive to oversupply the market, the bank said, adding the market was expected to be more under-supplied in 2022 than the International Energy Agency has suggested.

"Brent prices rising above recent highs again is probably something from mid 2022 and beyond," the bank said while raising its third quarter Brent outlook to $90 a barrel from $85.

The market could see a supply deficit in 2023 that would deepen further, it added. 

(Reporting by Seher Dareen and Arpan Varghese, editing by David Evans)

Categories: Legal Offshore Production Oil Price

Related Stories

Pharos Energy Kicks Off Drilling Campaign Offshore Vietnam

Energy Drilling’s EDrill-2 Rig Starts Ops for PTTEP in Gulf of Thailand

ABL Secures Rig Moving Assignment with India's ONGC

Seatrium Secures ABS Backing for Deepwater FPSO Design

Brownfield Output Decline Accelerates, says IEA

Hanwha Ocean Enlists ABB for Singapore’s First Floating LNG Terminal

POSH Set to Tow Nguya FLNG from China to Eni’s Congo Field

Synergy Marine Group Completes Conversion of LNG Vessel to FSRU

Norwegian Oil Investment Will Peak in '25

Yinson Production, “K” LINE Target Europe's CCS with FSIU and LCO2 Solutions

Current News

Pharos Energy Kicks Off Drilling Campaign Offshore Vietnam

Viridien to Shed More Light on Malaysia’s Offshore Oil and Gas Potential

US Pressure on India Could Propel Russia's Shadow Oil Exports

Energy Drilling’s EDrill-2 Rig Starts Ops for PTTEP in Gulf of Thailand

RINA Wins FEED Contract for Petronas’ Flagship CCS Project in Malaysia

ABL Secures Rig Moving Assignment with India's ONGC

Pakistan, Türkiye Deepen Oil and Gas Ties with Offshore Indus-C Block Deal

Eni-Petronas Gas Joint Venture Up for Launch in 2026

Vietsovpetro Brings BK-24 Oil Platform Online Two Months Early

Propane’s Economic Edge for Ports During Trade Uncertainty

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com