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Crude oil futures closed with a second straight loss on Tuesday, taking a slice of profits after hitting nearly six-month highs triggered by geopolitical risks and tight supply.
Ceasefire talks in the Gaza war have continued, but oil spills have been limited reports that Israel and Hamas are still far from an agreement.
Citing growing geopolitical risks, Morgan Stanley analysts raised their forecasts for the price of Brent crude oil for the second quarter by $4.50 a barrel, to $92, and for the third quarter by $4.50 a barrel, at $94.
The bank said it expects restrictions in the second and third quarters, with supply curbs from OPEC, some downside to Russian production and a seasonal recovery in demand in sight.
His assessment of market fundamentals remains the same, but “when it comes to geopolitical risk, however, even small odds can add several dollars to oil prices,” according to Morgan Stanley analysts, including Martijn Rats.
Spot crude could reach $100 a barrel this year if OPEC+ maintains its production discipline and continues to withhold crude from global markets, Vitol CEO Russell Hardy said.
In a supply-constrained market, with oil consumption expected to grow by 1.9 million bbl/d in 2024, a similar level to last year, oil at “$80-$100 seems like a reasonable range for the market, given OPEC’s control of supplies around the world,” Hardy told the Financial Times Global Commodity Summit in Switzerland.
Front-month Nymex crude (CL1:COM) for May delivery is out -1.4% at $85.23/bbl, and June Brent crude (CO1:COM) closed -1% at $89.42/barrel.
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The U.S. Energy Information Administration raised its average Brent crude price estimate this year from $87 to $89 a barrel, which it said “reflects our expectations of strong draws on global oil inventories this quarter.” and ongoing geopolitical risks,” adding that he expects an average Brent crude price. Brent crude reached $90 a barrel in the second quarter.
OPEC+’s extensive production cuts “increase upward pressure on prices at precisely a time of year when oil demand typically increases due to the spring and summer driving seasons in the Northern Hemisphere,” the OPEC+ said. EIA.