Barclays hikes 2024 Brent crude price forecast on tighter balance view

Barclays raised its Brent price forecast for 2024 by $8 per barrel to $97 a barrel as it expects market balances to tighten further next year.

"Slowing non-OPEC+ supply growth, driven primarily by the US, and persistent underproduction from several OPEC+ producers due to structural constraints bolsters our core thesis behind a constructive view on oil prices," Barclays said in a note.

Earlier this month, Saudi Arabia extended its voluntary production cut of 1 million bpd to the end of September, adding that it could be extended beyond then or deepened. Russia also said it would cut oil exports by 300,000 bpd in September.

Barclays forecasts a supply deficit of 670 thousand barrels per day (kb/d) in 2023 and 250 kb/d in 2024 and recommends going long the $90-$95 per barrel call spread on January 2024 Brent contract at a net cost of $1.1 per barrel.

However, the bank lowered its 2023 Brent forecast by $3 per barrel to $84 per barrel, but left fourth quarter outlook unchanged at $92 per barrel.

Brent crude futures for October were trading around $86 a barrel by 0748 GMT on Wednesday."A tussle between key producers and consumers is visible in the G-7 efforts to cap Russian export prices and OPEC+ announcing significant voluntary adjustments to output," the bank said.

"The urge to keep prices in check is also visible in the tapping of strategic petroleum reserves by the US and other key consumers, the US outreach to Venezuela and a potential informal agreement with Iran."