Barclays in a note on Thursday said the cut in forecasts is primarily due to “a higher starting point for inventories and a potentially longer path to OPEC spare capacity normalization.”
But it added that it expects demand momentum to pick up sequentially and non-OPEC+ supply growth to decelerate sharply in 2024.
Crude futures lost over 10% in 2023 in a tumultuous year of trading marked by geopolitical turmoil and concerns about the oil output levels of major producers around the world.
Large inventory draws failed to materialize in fourth quarter 2023, as demand slowed and supply came in stronger than expected, the bank said.
On Sunday, rising supply and competition with rival producers prompted top exporter Saudi Arabia to cut the February official selling price of its flagship Arab Light crude to Asia to the lowest level in 27 months.
Barclays said “we think investors should weigh the risk of looser OPEC+ cohesion, but it should not be the baseline scenario.”
Angola left OPEC, effective from Jan. 1, following a row with the producer group over the size of its output quota. The decision also follows an agreement signed between China and Angola on enhanced cooperation.
Oil prices edged higher for the day on concerns about escalating conflict in the Middle East, with more attacks on Gaza and on shipping in the Red Sea, even as a surprise build in U.S. crude stockpiles capped gains.
The bank highlighted there has been no material effect on supply despite rising Middle East tensions, adding that unplanned supply outages are trending at the lowest level in years.
(Reporting by Ashitha Shivaprasad in Bengaluru Editing by Tomasz Janowski)
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