Emkay projects Brent oil price range at $83 to $92 per barrel in short term

In a recent report, brokerage house Emkay said that it believes that the immediate range for Brent is projected between $83 and $92 per barrel, with continued assessment needed for affirmation in the coming months.

Analysing the current state of Brent oil prices, the brokerage highlighted that their recent range-bound nature, is occasionally influenced by geopolitical tensions. Despite brief upticks due to conflicts like the Israel-Iran escalation, stability has returned with the conclusion of operations, noted Emkay.

The report emphasised that the uninterrupted oil supply amidst challenges, with subdued prices is expected as long as demand remains steady. While temporary spikes are forecasted due to seasonal factors like summer holidays, Emkay believes that the sustained growth hinges on global economic strength and potential Fed interest rate cuts.

Emkay also underscored the importance of demand dynamics in maintaining higher price levels. While positive factors may initially support prices, sustained elevation relies on the intensity of demand growth, it added.

Oil prices continued to decline, reaching their lowest point in three months on Thursday, with Brent falling for a fourth session towards $81 a barrel and West Texas Intermediate nearing $77. This downturn followed indications from the Federal Reserve suggesting a possible prolongation of higher interest rates, potentially dampening energy demand. The hawkish stance outlined in Fed minutes from a recent meeting introduced another bearish factor to the oil market, which was already displaying signs of weakness ahead of an upcoming OPEC gathering.

Despite a recent easing since mid-April, oil prices remain higher this year, attributed in part to supply cuts implemented by the producer group.

Federal Reserve policymakers stated on Tuesday that the U.S. central bank should wait for several more months to ensure that inflation indeed progresses towards its 2 percent target before considering rate cuts. The prospect of higher borrowing costs, which can potentially slow economic growth and impact oil demand, has put pressure on oil prices.

Investors have scaled back their expectations for the pace and extent of global rate cuts anticipated this year due to more hawkish-than-expected minutes from the Federal Reserve’s latest policy meeting, alongside a notable uptick in UK inflation figures and a cautious evaluation of New Zealand’s inflation challenges by the country’s central bank. This shift in sentiment has led to a weakening of Asia stocks.

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