BBI INFO

1. Market review: WTI crude oil once rose to around $79, and finally closed up 0.7% to $78.22/barrel; Brent crude oil closed up 1.09% to $83.79/barrel.

2. According to the Wall Street Journal, ConocoPhillips is negotiating to sell Venezuelan oil in the United States. In addition, the chairman of the White House Council of Economic Advisers Routh said that Biden does not rule out the possibility of further releasing the strategic oil reserve.

3. Georgieva, president of the International Monetary Fund (IMF), said that the IMF is not expected to lower its forecast for global economic growth of 2.7% in 2023, pointing out that concerns about rising oil prices have not materialized and the job market Still going strong. There is more and more evidence that the United States can avoid a recession in 2023 and achieve a “soft landing”.

MARKET VIEWPOINTS

Standard Chartered Bank

Oil prices will rise moderately
Since the beginning of June last year, oil prices have been falling all the way, and the exaggerated expectations in the market such as the super cycle and the upcoming release of pent-up demand have not been eliminated. In our view, the current seven-month downtrend in the oil market may falter. Barring a major surprise, those exaggerated forecasts have largely been disproved, the oil market has stabilized, and oil prices are now below our 2023 forecasts. But with oil prices falling sharply, OPEC’s possible production cuts will bring supply risks to the market. The current speculative positioning in the market suggests that the market sentiment remains bearish, but we expect oil prices to have room for an upside of $5-10.

Morgan Stanley

Headwinds to the macroeconomic outlook in the first quarter and a modest rise in inventories put pressure on short-term oil prices. Starting from the second quarter, the supply and demand of the oil market will tend to be balanced, and will tighten in the third and fourth quarters, which will support the rise in oil prices. Therefore, we expect Brent oil price to remain in the range of 80-85 US dollars in the first quarter, but the inventory is still low, and the idle production capacity is insufficient. When demand growth resumes, the crude oil market will find that the upper limit of production capacity is close at hand. This will support oil prices to recover to 100-110 US dollars / barrel from the second quarter.

RMB Group

Firm shares of oil companies hint at upside potential
While WTI crude oil prices have fallen sharply from their summer highs and bottomed out in December, none of the major oil companies’ stock prices have followed oil prices down. It’s as if the $50 drop in oil prices never happened. The gap between stock prices and the price of oil itself suggests that oil company stocks are wildly overvalued or crude oil is grossly undervalued, or even both. This makes crude oil futures very attractive in our view. Therefore, we expect WTI crude oil prices to rise to US$95/barrel in the next 4 months, which is about 21% higher than the current level.

Moody’s Chief Economist Zandi

Rising oil prices may hinder cooling inflation
The cost of housing services, which accounts for about a third of the CPI, saw a sudden drop in newly released rents as rental housing surged as supply chains and the workforce recovered. Housing inflation is expected to slow sharply later this year. But the hardest part of inflation to come down is in non-housing services, but last week’s jobs report showed that wage growth was already slowing. However, there are still many factors that may prevent inflation from returning to the Fed’s target level, the most worrying being rising oil prices. Many factors are affecting the global demand and supply of crude oil, such as Russia, OPEC, the release of the United States’ strategic oil reserves, China’s demand and so on. But oil prices may struggle to rise much enough to help lower inflation.

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