Oil price 'could spike back up to $90 a barrel'   

The price of crude oil could rebound and quickly rise past $90 per barrel.

The price of crude oil could rebound and quickly rise past $90 per barrel should the US Federal Reserve ease back on the pace of interest rate hikes and a "successful" economic reopening by China, Bank of America Global Research has said.

Lately, oil prices have been steadily declining due to fears that a weakening global economy would slash fuel demand, setting prices on track for a second consecutive quarterly fall. 

But Bank of America, or BofA, forecasts Brent crude prices - trading at $75.95 a barrel -- will average $100 a barrel in 2023, driven also by a Chinese oil demand recovery on a post-Covid reopening and a drop in Russian supplies of about 1 million barrels per day against the backdrop of European Union sanctions.

Moreover, output cuts by oil producing group Opec+ could be implemented in full to support prices, the bank said in a research note. 

China last week announced the most sweeping changes to its resolute anti-Covid regime since the pandemic began three years ago, loosening rules that curbed the spread of the virus but sparked protests and hobbled the world's second-largest economy.

However, "our oil demand and price projections for 2023 rely heavily on robust China and India demand growth, so any Asia reopening delays could affect our expected price trajectory", said the bank, adding the path to a post-pandemic environment may be bumpy "given the low levels of immunity in China". 

Wholesale gas prices

Meanwhile, wholesale gas prices fell late in session on Monday, even as the cold snap settled for a second week across much of northern Europe, and shares fell.         

"The relatively moderate temperatures thus far had eased concerns over gas storage levels, but hopes that demand could be curtailed have been dented by this latest wave of cold weather in Western Europe," said Joshua Mahony, senior market analyst at online broker IG.

"For markets, the recent optimism seen over recent months does come off the back of deteriorating inflation data. With that in mind, any surge in energy prices does provide a significant risk of a second surge in prices that could undermine equity markets,” he said.  

The price of European continental and UK for delivery in January both fell by around 3%.  

EU gas supply           

Separately, the International Energy Agency, or IEA, said the EU has enough gas for the winter but could face a shortage next year if Russia cuts supplies further. 

Despite Russia slashing gas deliveries this year, Europe has averted a severe shortage and started the winter with brimming gas storage tanks - thanks in part to emergency EU measures to fill storage, plus a lucky spell of mild weather and high gas prices that dampened demand for the fuel.

But next year may pose an even tougher test than the energy crunch that has this year hiked fuel bills for European households and forced industries to temporarily close to avoid crippling gas costs.

If Russia was to cut the small share of gas it still delivers to Europe, and Chinese gas demand rebounded from Covid lockdown-induced lows, the EU could face a gas shortfall of 27 billion cubic metres in 2023, the IEA said. Total EU gas consumption was 412 billion cubic metres in 2021.

"This is a serious challenge," IEA executive director Fatih Birol told a press conference with the European Commission in Brussels. 

Reuters and Irish Examiner