Barclays cuts 2024 Brent forecast on resilient US output, Venezuelan supply

(Reuters) – Barclays on Wednesday lowered its 2024 Brent crude price forecast by $4 to $93 a barrel, citing resilient U.S. oil supply and higher output from Venezuela following the relaxation of sanctions on the Latin American producer.

Oil prices fell to their lowest in more than three months on expectations of lower demand in the United States and China, with Brent futures trading at $80.50 a barrel by 1311 GMT. [O/R]

The lifting of sanctions on Venezuela’s oil sector in October added supplies to a market strained by OPEC+ production cuts.

Oil prices have also given up some gains from last month that were driven by fears that an escalation in the Israel-Hamas conflict could disrupt supply from the Middle East.

The U.S. Energy Information Administration said on Tuesday that U.S. crude output this year will rise by slightly less than previously expected, but demand will fall.

But Barclays said its oil price forecast was still above consensus and the forward curve, noting that its demand outlook has strengthened. It hiked its demand forecast for China by 200,000 and 300,000 barrels per day for 2023 and 2024 respectively.

“The recent decline in prices is driven primarily by the reappearance of demand concerns and not the fading of the geopolitical risk premium,” the bank said in a note.

Oil prices should remain relatively high at least through the end of this decade, “as despite the ongoing transition, the supply side appears more constrained,” the bank said, pegging the fair value for Brent over 2025-30 at $80 a barrel.

(Reporting by Anushree Mukherjee in Bengaluru; editing by Barbara Lewis)