Brent crude and WTI oil price forecasts: IEA expects demand to increase in 2023

The IEA expects oil prices to rebalance this year, although risks remain

The International Energy Agency (IEA) has released its Oil Market Report for June 2022.

Some of the key takeaways from the report are as follows:

• Slowing demand growth and a rise in oil supply through to the end of the year should help balance the market
• A weaker economic outlook and elevated prices temper demand expectations this year
• Primary risks to oil prices are from the implementation of increased sanctions on Russia, a post lockdown demand recovery from China, sharp Libyan production losses persisting and Organisation of the Petroleum Exporting Countries (OPEC+) extra production capacity waning
• Oil demand is expected to rise to 101.6 million barrels per day (bpd) in 2023, ahead of pre-Covid-19 pandemic levels
• The recovery in oil demand in 2023 is expected to be driven by resurgent growth in China, offsetting softer demand from Organisation for Economic Co-operation and Development (OECD) countries

Brent Crude Oil

The price of Brent Crude remains in a longer-term uptrend. This is highlighted by the price continuing to trade well above the 200 day simple moving average (SMA) represented by the blue line.

In the short term our black trend line marks a near-term uptrend as well. Traders respecting the upward trend might prefer to keep a long bias to trades on the commodity.

A price close (on a daily time frame) above the 12340 level could unlock further gains with the next resistance target considered at the 12950 level.

In the event that we instead see a move lower and break of trend line support, we would not be looking to trade the move lower, but rather waiting for a bullish price reversal at one of our lower support levels for long entry.

WTI (US) Crude

The long-term trend for US crude oil remains up similarly to its Brent crude counterpart. The price is currently grinding lower in the near term from overbought territory. This serves as a short term correction of a longer term uptrend.

In line with the longer-term uptrend, we currently prefer keeping a long bias to trades on the commodity. Long entry would be considered on either a bullish price reversal closer towards either the 11150 or trend line support levels.

Alternatively long entry may be considered on an upside break of the 12100 resistance level as well, with a longer term upside resistance target considered at the 12800 level.

Only on a move below the major low at roughly 9800 would we reassess our longer-term upside bias currently favoured on trades of the commodity.