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The barrel of the European reference Brent crude is forecasted to gyrate around the $40.00 mark in the longer run, according to Strategists at UOB Group’s Quarterly Global Outlook.

Key Quotes

“Crude oil prices staged the most remarkable V shaped rebound across 2Q. From below USD 20 / bbl, Brent crude oil doubled to USD 40 / bbl. More incredible is the snap back in WTI crude oil from the deep negative price to just under USD 40 / bbl as well. Needless to say, a lot of this price rebound is due to the near-term supply discipline and production cuts from OPEC+. Amidst on-going weak global energy demand, it is imperative for OPEC+ to continue its disciplined approach. However, will OPEC+ be able to keep its act together? Or will the opportunistic partners revert back to their own ways now that crude oil prices have bounced back?.”

“We should be under no illusion that the OPEC+ production cuts can be enforced indefinitely. In addition, global energy demand remains weak. As such, we find it difficult for crude oil prices to recover further. Therefore, we forecast neutral Brent crude oil at USD 40 / bbl for coming 4 quarters.”