Brent Crude prices are expected to average $92 per barrel this year, Barclays said on Wednesday, slashing an earlier forecast by $6 a barrel due to a more resilient Russian oil supply than previously thought.
The UK bank also cut its average 2023 WTI Crude forecast by $7 per barrel, to $87.
Barclays sees prices next year averaging slightly higher, at $97 a barrel Brent and $92 per barrel WTI.
Currently, the oil market is in a surplus of around 800,000 barrels per day (bpd), the bank has estimated, and expects the surplus to turn into a 500,000 bpd deficit in the second half of 2023 due to the recovery in demand led by China's reopening.
The bank expects China's oil demand to rise by 900,000 bpd-similar to the latest forecast from the International Energy Agency (IEA), which said in its monthly report that a resurgent China would dominate the growth outlook this year.
Barclays now sees Russia's oil supply losses smaller than previously expected and forecasts a 500,000 bpd drop in Russian output this year, down from a decline of 700,000 bpd expected earlier.
Last week, JPMorgan said Russia would likely manage to keep its oil production around the levels from before the Russian invasion of Ukraine, thanks to solid demand for Russia's crude oil in India and China.
Early on Wednesday, oil prices were down following Tuesday's comments from Fed Chair Jerome Powell, who said in testimony in Congress that the Federal Reserve "would be prepared to increase the pace of rate hikes" if inflation continues to run hot. Brent was down at $83 per barrel, and WTI traded at $77 per barrel before the weekly EIA inventory report.
Despite the current bearish mood, there are bulls among banks and industry players.
Oil prices could hit the $90-$100 per barrel range in the second half of this year as global demand is set to reach record levels, Russell Hardy, CEO at the world's largest independent oil trader, Vitol Group, said last week.
Goldman Sachs, for its part, still expects Brent Crude to hit $100 per barrel this year, but only in December, compared to earlier expectations of $100 oil as soon as mid-2023.
By Michael Kern for Oilprice.com
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Michael Kern is a newswriter and editor at Safehaven.com and Oilprice.com, More