The recent slide in oil prices is starting to bottom out, according to analysts who predict that a more significant pickup in the coming quarters is in the cards.

Oil prices saw their third consecutive weekly decline last week, marking the longest losing run this year. However, that may soon come to pass, according to some market watchers.

“Now it definitely feels like they’re at the bottom — there are multiple signs of that,” said Citi’s Global Head of Commodities Research Ed Morse.

“Inventories built a lot during the first and second months of the year, and then they’ve come off. So that’s part of figuring that it’s at the bottom.”

He added that markets are currently facing the impact of OPEC+’s recent production cuts, and the world is moving into a higher demand season. Last month, the oil cartel announced it was slashing output by 1.16 million barrels per day. The cuts came into effect in May and will run until the end of 2023. The production declines prompted some analysts to warn prices could surge to triple digits, which failed to materialize.

“We’re looking more positively at the second and third quarter than what’s happened in the first quarter,” Morse said.

Financial services company ANZ also believes that the oil slump could bottom out soon, with global oil demand set to grow by 2 million barrels per day, keeping the market under-supplied throughout 2023.

“OPEC+ output cuts and a rebound in China’s demand will likely offset slower demand elsewhere … Therefore, we expect prices to bottom out soon,” the bank wrote in a research report dated May 8.

Similarly, Goldman Sachs has maintained its forecasts for a higher crude oil price tag.

“Our forecast remains that Brent rises to $95 per barrel by December and $100 per barrel by April 2024 as we expect large deficits in H2,” the investment bank stated in a report released over the weekend.

Global benchmark Brent traded 1.74% higher at $76.61 a barrel Monday, while the U.S. West Texas Intermediate futures stood 1.92% at $72.71 per barrel.

Brent had slipped 8% year-to-date by last Friday. On Wednesday, the benchmark posted a close of $72.33, marking the lowest since December 2021, according to data from Refinitiv. On a similar vein, West Texas Intermediate has seen a 11% year-to-date fall.

The slip in prices is attributed to a confluence of economic concerns.

Last Wednesday, the U.S. Federal Reserve hiked interest rates by a quarter of a percentage point, raising investors’ concerns that slower economic growth could dent energy demand.

“Pressure from anti-inflationary action undertaken by both the U.S. Fed and the ECB [European Central Bank], have resulted in lackluster demand growth for most of the OECD, with recession risks lying ahead,” Morse wrote in an e-mail.

Additionally, a surprise contraction in China’s April manufacturing activity also threw a shade of doubt over the recovery of the country’s commodity demand.

“The narrative that oil markets will tighten later this year because of rising Chinese demand is being challenged,” Commonwealth Bank of Australia wrote in a daily note dated May 8.

“A tightening oil market in H2 2023 will now rely more heavily on OPEC+, particularly Russia,” CBA’s Vivek Dhar wrote.

And Moscow’s oil production has proved more resilient than expected.

“Russia’s oil production and exports have been resilient despite their announcement production cut of 500,000 barrels per day,” said Kang Wu, S&P’s head of global demand and Asia analytics.

The recent slide is reminiscent of the downside volatility in March and “forces’ an evaluation of whether or not the OPEC will deliver another Saudi-led cut,” Mizuho’s Vishnu Varathan wrote in a note dated May 8.

But S&P’s Wu reckons there is still a “big uncertainty” as to what the cartel’s next move will be.

“Unless they see real demand destruction either due to a weakening economy or surging prices, they probably will hold on a bit longer to decide what to do.”