UBS Daily: Oil prices to remain supported even if rebound is slower
Brent prices dipped below USD 90 per barrel last week to the lowest level since January on fears that widening mobility curbs in China and aggressive central bank rate hikes will weigh on global demand for energy. But while we expect China’s zero-COVID strategy may delay its oil demand recovery, we still believe that the overall tightness in global supply will ensure prices remain supported in the near to medium term.
Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, says:
“We continue to hold a positive outlook on crude prices. We have reduced our December Brent oil forecast by USD 15 to USD 110 per barrel due to prospects of slower recovery in Chinese oil demand. The revised forecast is still higher than the current Brent spot price of roughly USD 94 per barrel. We maintain our projection for Brent to climb to USD 125 per barrel by March 2023 and to remain elevated around there till September 2023.”
“We remain positive on energy stocks, and we continue to advise risk-taking investors to add long positions in longer-dated Brent oil contracts or sell Brent’s downside price risks.”