UBS Analysts Lower Oil Price Forecasts for 2024-2026 Amid Weaker Global Demand - What Does This Mean for Your Investments?
UBS analysts have revised down their oil price forecasts for the years 2024-2026, citing softer global demand and a more stable supply outlook. The new forecast for oil in the fourth quarter of 2024 has been reduced to $75 per barrel from $83, with the 2024 average price now at $80 per barrel. This adjustment reflects a weaker global demand environment, particularly in key markets like China.
For 2025 and 2026, the Brent forecast has also been lowered to $75 per barrel. UBS analysts believe that OPEC+ will likely postpone the unwinding of its production cuts, with any significant increases delayed until 2027 or 2028. This shift comes as the market remains finely balanced, with weaker demand and steady non-OPEC+ supply growth reducing the need for OPEC+ to increase output.
Weaker demand growth and higher-than-expected non-OPEC+ supply are key factors affecting oil prices. UBS predicts a trading range of $65 to $85 per barrel for Brent, with prices potentially rising above $90 per barrel in case of geopolitical tensions. On the other hand, a global recession could push prices into the $60s.
UBS expects a slowdown in global oil demand growth by the late 2020s, driven by factors like increasing vehicle fuel efficiency and the adoption of electric vehicles. Peak oil demand is likely to be reached by 2029, with EV penetration replacing 3.4 Mb/d of oil consumption globally by 2030.
In conclusion, the revised oil price forecasts by UBS suggest that investors should be cautious about their oil-related investments. We could see softer oil prices in the coming years, especially if demand growth remains subdued and non-OPEC+ supply continues to increase. It's important to monitor market conditions and be prepared for potential fluctuations in oil prices that could impact your financial portfolio.