Morgan Stanley expects Brent crude to return to $110 a barrel by mid-2023

On Wednesday, Morgan Stanley expects Brent crude oil prices to rise to around $110 a barrel by mid-2023, indicating that prices are being supported by high demand and continued tight supply of crude oil.

The investment bank said in a note: “We still expect oil prices to rise, supported by the recovery in demand after China eased the Corona restrictions, and the recovery of the aviation sector in amid a lack of supply due to low investment levels and risks to Russian supplies, an end to withdrawals from the Strategic Petroleum Reserve and a slowdown in US shale oil production.

Oil prices rose on Wednesday after both the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency expected a recovery in demand over the next year, according to Reuters.

The bank said macroeconomic headwinds will push the market into a slight oversupply and likely keep prices somewhat by range throughout the first quarter.

But Morgan Stanley oil analyst Martin Rats expects the market to come back in equilibrium in the second quarter and will see more scarcity in the second half of 2023.

For US gas, the Bank expects new supply to outstrip demand next year, leading to a lower balance and posing downside risks to prices post-winter.

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