Citi Revisits Its Oil Prices Forecast for 2024

Citi analysts have identified geopolitical tensions and extreme weather events as continuing risks for oil prices in the short term. They highlight ongoing conflicts in the Middle East and the impact of Hurricane Beryl as significant factors. Despite these influences propelling prices into the $80 range, analysts foresee a potential decline later in the year.

Citi notes that while the underlying strength of the physical market currently appears robust, it is expected to soften. They acknowledge mixed signals regarding demand; although there have been positives, such as unexpectedly high gasoline demand in the U.S., overall demand remains lower compared to last year.

The firm has maintained its price target of $82 per barrel for the next three months but has reduced its six to twelve-month target to $72 per barrel, attributing this adjustment to a possible supply surplus following the summer months.

Current physical market activity shows a concentrated focus on pre-summer contracts, but Citi warns that indicators may shift towards softer conditions for deliveries in September, compounded by the uncertainties of the ongoing hurricane season.

In terms of financial positioning, Citi describes the overall outlook as “fairly clean,” although it notes a significant long position in West Texas Intermediate (WTI) futures. This position may transition to a more neutral stance, or even lean long, if short positions are predominantly found in later contracts, reflecting a bearish outlook for 2025.