Citi Research on Monday raised its bull case scenario for oil prices for this quarter and the next one, citing heightened potential of the market to fear or realize supply losses during these months due to growing Middle East conflict.
The bank upgraded its bull case for the fourth quarter of 2024 and first quarter of 2025 to $120 per barrel (bbl) from $80/bbl.
However, “we maintain our baseline forecast for $74/bbl Brent in 4Q’24 and $65/bbl during 1Q’25, owing to weak underlying oil market fundamentals,” Citi added.
It also said it was holding its bear scenario, which includes OPEC+ raising production starting in December, and a reduction in oil supply risks at a 20% indicative probability for the fourth quarter of 2024 at $60/bbl and 1Q/25 at $55/bbl.
Brent crude futures were trading around $77 per barrel on Monday, while U.S. West Texas Intermediate crude futures were at $74 per barrel.
The bank said that after reviewing major geopolitical risk events since the 1950s, the main takeaway was that historical events that potentially or actually impact oil supply do not tend to persist for longer than a few quarters at most.
