Oil Prices Going Up As Experts Predict an Increase in 2023

Oil prices increased on Wednesday as OPEC and the International Energy Agency (IEA) predicted a demand recovery in 2023, as U.S. rate rises are projected to cease in line with lowering inflation.

U.S. West Texas Intermediate (WTI) crude futures climbed by $1.96 to $77.35 per barrel, while Brent crude futures jumped $2 (2.48%) to $81.88 per barrel. The value of both contracts dropped by about 11% over the last week.

As concerns about an oversupply of oil fade, the Brent contract has changed back to a backwardated market structure in which front-month loading barrels trade higher than later deliveries.

Since last week, the structure has been in contango, with front-month deliveries being less expensive than later-loading ones.

With China, expected to increase its consumption, OPEC predicts that oil demand would rise by 2.25 million barrels per day (bpd) in 2023, to a total of 101.8 million bpd.

After a decline of 400,000 barrels per day in 2022, the IEA expects oil demand in China to increase to 101.6 million barrels per day in 2023.

“The setup remains supportive of triple digit prices…The recent volatility presents a good entry point ahead. Balances may be looser for the next quarter but by 2Q a new price rally will be upon us,” said Oswald Clint, Bernstein analyst.

U.S. Federal Reserve policymakers are likely to increase interest rates by 50 basis points on Wednesday, less than the 75 basis point pace they have kept since June.

Original source material for this article taken from here