After retreating last week, oil prices rebounded yesterday, coming just shy of last week’s multi-year high. This morning, markets are relaxing a bit, though there are still plenty of positive catalysts for prices. Bank of America now expects Brent crude to hit $120 by the end of June, exceeding the forecasts of other major banks. The report focuses on the same factors that have dominated headlines lately – tight supplies, falling inventories, and fuel switching during a cold winter.
Goldman Sachs recently updated their forecast as well, noting upside risk to their $90/bbl oil forecast. Goldman reported that up to 1 million barrels per day of oil could be consumed for power this winter, nearly double earlier forecasts. With OPEC+ only adding 400 thousand barrels per day each month, and global demand continuing to rush toward 100 MMbpd, forecasters are expecting tight conditions in the near future.
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OPEC+ is meeting on Thursday to discuss their production strategy, and the group continues feeling pressure to speed up their output. The US, India, and Japan have all called on OPEC+ to bring stability to oil prices, but key OPEC officials have stated they still don’t see a need to revise their approach. The group has been adding 400 kbpd each month, and the meeting on Thursday will likely rubber-stamp another 400-kbpd increase. The growing cacophony of countries opposing OPEC could add some volatility to markets this week.