How will the trend of the prices of oil, gas and industrial metals in 2023? To give their forecasts the experts of the Market Strategy Office of MPS Capital Services who, as far as oil is concerned, present a target target of 70 dollars a barrel for 2023, with the risk of overshooting downwards.
It is mentioned in the report dedicated to the outlook for the whole of 2023, which the Energy Information Administration (EIA), the main US agency for sector statistics, estimates for next year a 1% growth in consumption.
Ma “in our opinion – analysts say, –this estimate is too optimistic given the high probability of a recession. In this scenario, we believe that the $70/b of Brent represents a first downward target”.
“On the other hand on the supply side – continue from Mps Capital Services – sand it is true that a further drop in prices could trigger new intervention by OPEC+, on the other hand the possibility of a truce in the conflict in Ukraine during the year could limit this eventuality”.
Experts add that, “In the light of the considerations made, any rebounds towards $90/b are, in our opinion, opportunities for easing.
And they stress again, with regard to oil prices, that “lo risk scenario (upward) is instead attributable to a contraction beyond expectations in Russian production due to EU sanctions, or to unforeseen events that damage the production of some important market players (for example, there are strong tensions in the Middle East between Iran and Arabia”.
Turning to gas TTF, Mps Capital Services expects a decline for the end of winter, followed by high uncertainty for the end of 2023:
“The recent drop in TTF gas prices is due to three factors”, the experts say:
- Destruction of demand caused by high prices and adverse economic conditions.
- Low probability of particularly severe winter based on the ECMWF model”.
- European stocks at safe levels.
In their base scenario, the experts indicate that the above factors will continue to drive prices even in the first months of the new year:
“We therefore expect TTF gas prices below €100/Mwh with possible downward overshooting towards the static support at €72/Mwh”.
“More difficult to make forecasts for winter 2023/24 as much will depend on the ability to replenish inventories in a context where there will be greater competition from Asia (especially China) on LNG imports. Furthermore, it will of course be essential to monitor the evolution of the conflict in Ukraine”, they continue.
As for industrial metals, analysts at MPS Capital Services are expecting a U-shaped trend in 2023.
“We expect a start to 2023 still marked by weakness for industrial metals, given the macro scenario outlined on China at the beginning of this presentation. At this stage, the prices could get closer to the lowest tested during the summer“.
“After that, it should manifest itself a marked recovery thanks to the delayed effect of the stimulus measures (credit impulse) implemented in particular in China. This performance could be affected by any damage to the supply of some producers given the extremely low level of global inventories”. Mps Capital Services point out, adding that “the weakness of the first part of the year could therefore be used for hedges with a view to the end of 2023/beginning of 2024”.
“Important technical levels of support are as follows: copper (7930 – 7460/7211 – 6670), aluminum (2137 – 2000 –1760), zinc (2751 – 2428 – 2000), nickel (19200 – 17085 – 14240).