On this day, a Citigroup report was released warning about the price of a barrel. According to analysts, crude oil could collapse to $65 by the end of this year and fall to $45 by the end of 2023 if there is a recession that cripples demand, they warned.
That outlook is based on the absence of any intervention by OPEC+ producers and a decline in oil investments, analysts including Francesco Martoccia and Ed Morse said in a report. Brent crude, the global crude benchmark, last traded near $111 a barrel.
Oil soared this year following the Ukraine invasion, and banks are now trying to chart their course for 2023 as central banks raise interest rates and recession risks mount.
Citi’s perspective compared today’s energy market to the crises of the 1970s. At present, the bank’s economists do not expect the United States to fall into a recession.
“For oil, historical evidence suggests that oil demand turns negative only in the worst global recessions,” Citi analysts said in the July 5 note. “But oil prices fall in every recession to about marginal cost.”
Source: Ambito
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