$120 Crude by June? Bank of America Raises Forecast AGAIN

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.

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The information contained herein is derived from sources believed to be reliable; however, this information is not guaranteed as to its accuracy or completeness. Furthermore, no responsibility is assumed for use of this material and no express or implied warranties or guarantees are made. This material and any view or comment expressed herein are provided for informational purposes only and should not be construed in any way as an inducement or recommendation to buy or sell products, commodity futures or options contracts.

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