Oil Prices Pulled Lower by Slower Demand Growth: BofA’s Blanch

Francisco Blanch, head of global commodities and derivatives at BofA Global Research, discusses the factors behind his firm cutting their oil forecast for the year to $80 Brent crude and $75 WTI.
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There is there’s a number of things going on. I think there is. There’s definitely a lot of supply. We’ve had record levels of production in the U.S.. If you look at total liquids, we are now breaking 21 million barrels a day of crude oil. Biofuels in America.

So that’s kind of twice what Saudi or Russia produce. So America has become bigger than the combination of both at this stage. Right? So just one part of it. I think the other element of it is that we’ve had

A lot of supply from Iran where, you know, we’ve seen more and more lax enforcement of of of sanctions there. Exports are running in close to one and a half million barrels a day. Then, of course, there’s the Venezuelan story with the six month reprieve on U.S.

Sanctions. So I think you’ve had a lot of supply and as you pointed out, demand is decelerating. We’ve had a very, very sharp increase in interest rates, which has really been slowing things down, maybe not so much in the labor market in the U.S., as we

Saw on Friday. But certainly across the world, high interest rates are are just putting some pressure on the economy is slowing it down. That’s kind of our baseline for the year, slower demand growth. So that combination is is I think

What’s kind of pulling prices lower. And we just we just cut our our Brent forecast for the year to 80 average WTI 75.