What to Watch in Oil Markets in the Second Half of the Year: OPEC+’s decision to increase production earlier than expected may lead to a decline in oil prices in the second half of the year.
The U.S. Energy Information Administration has lowered its forecast for Brent crude oil prices this year,
and the International Energy Agency has reduced its demand forecast.
For consumers, increased OPEC+ production may help control recently fallen gasoline prices.

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Changes in Price Forecasts

Impact of Increased Production

Shifting Expectations

Impact of Divergent Demand Forecasts

Clean Energy Investments

Changes in Price Forecasts

Many energy industry analysts expected a recovery in global oil prices in the second half of this year,
with Brent crude rising to over $90 a barrel.
However, OPEC+’s announcement that it would start raising production limits by October changed these expectations,
leading to a drop in oil prices.
Despite Brent crude recently rising above $85 a barrel,
the announcement altered the oil market equation for the year’s second half.

Impact of Increased Production

Mark Luschini, Chief Investment Strategist at Janney Montgomery Scott, said
the OPEC+ decision could curb gasoline prices and alleviate company inflationary pressures.
Brent crude prices had risen by 20% since the beginning of the year but fell below $80 in late May.
Analysts consider this decline temporary,
given the improvement in global economic activity and central banks’ expected interest rate cuts.

Shifting Expectations

Most Federal Reserve governors now expect only one rate cut this year.
With the possibility of increased production from OPEC+, Luschini has lowered his oil price forecast to $80-85 a barrel for the second half of the year.
Oil accounts for about half of the price of gasoline in the U.S., where the average price has fallen to $3.55 per gallon.

Impact of Divergent Demand Forecasts

The U.S. Energy Information Administration has lowered its forecast for average Brent crude prices to $84 a barrel,
and the International Energy Agency has cut its forecast for global demand growth.
OPEC indicates that demand will increase by 2.2 million barrels per day this year,
more than double the International Energy Agency’s estimates.
Summer stock drawdowns are expected to lift Brent crude to $80-90 a barrel by September.

Clean Energy Investments

The International Energy Agency expects global investment in clean
energy to be twice that in fossil fuels in 2024, potentially limiting oil gains.

What to Watch in Oil Markets in the Second Half of the Year

What to Watch in Oil Markets in the Second Half of the Year

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