Morgan Stanley sees Brent crude prices anchored near $80 per barrel in the first half in 2024 before declining towards the end of the year as it expects supply to outpace global oil demand growth this year. Growth in world oil demand is set to slow as post-COVID recovery tailwinds abate.

Morgan Stanley analysts peg 2024 oil demand growth at 1.2 million barrels per day (bpd), down from 2.2 million bpd in 2023, they said in a note dated Wednesday.

Supply from outside the Organization of the Petroleum Exporting Countries (OPEC) producer group is also expected to decelerate, but less so - still growing by about 1.7 million bpd in 2024, partially driven by the United States as well as Brazil, Guyana and Canada, the analysts said.

“We expect the production cuts (from OPEC) agreed in late Nov 2023 eventually to be extended throughout all of 2024, and do not exclude a further deepening of these cuts”, they said.

“This will likely limit the pace of inventory builds in 2024, but probably not prevent them. In our base-case projections, we still see inventories build modestly by about 0.5 mb/d this year,” they added.

Oil extends gains on Middle East supply worries

OPEC said on Wednesday cooperation and dialogue within the wider OPEC+ producer alliance would continue, after Angola last month said it would quit OPEC, and that it plans a Feb. 1 meeting to review implementation of its latest oil output cut.

Brent crude was trading around $78.63 a barrel at 0440 GMT on Thursday, while US West Texas Intermediate crude futures were at $73.22.