Barclays sees 'turbulence ahead' for oil markets, cuts Brent forecast

Pump jacks operate at sunset in Midland
Pump jacks operate at sunset in Midland, Texas, U.S., February 11, 2019. Picture taken February 11, 2019. REUTERS/Nick Oxford/File Photo

Oct 21 (Reuters) - Barclays has cut its Brent oil price forecasts for this year and 2023, flagging risks to demand from COVID-19 flare-ups in China and a broader global economic slowdown.

The oil market was likely to see "turbulence" given the uncertainty created by several factors at play at present, including the Ukraine war, analysts at the bank said in a note. However, overall they were still "constructive" on oil prices given the prevalent supply risks.

The bank cut its 2022 Brent price forecast by $3 per barrel to $100 per barrel, and its 2023 outlook, by $5 to $98. The global benchmark was trading on Friday at around $91.22 a barrel.

"Supply-side support remains unwavering, driven by a proactive OPEC+ and underperforming U.S. production. However, the lack of price response is likely to cut both ways and we would expect U.S. production to be a lot more resilient," the analysts said.

Earlier this month, OPEC+, which groups members of the Organization of the Petroleum Exporting Countries and allies including Russia, agreed to cut their output target by 2 million barrels per day (bpd).

Barclays cautioned that if the COVID-19 situation in China does not improve, it would imply a $5-10 per barrel downside to its 2023 price forecast.

"Oil demand could undershoot our estimates despite a potential easing of mobility restrictions due to a broader slowdown," it added.

Reporting by Brijesh Patel in Bengaluru; Editing by Susan Fenton

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