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Oil price has risen to post COVID-19 shock highs ahead of the OPEC+ meeting next week. MUFG Bank’s oil analyst forecast Brent and WTI at $48 and $45 respectively by end-2020.

Key quotes

“The favourable US election results and vaccine news has helped the price of oil to rebound sharply. It has lifted the price of oil to its highest level since the COVID-19 shock struck earlier this year. The bullish break out signals further upside is likely in the near-term.”

“The higher price oil has been supported by expectations that OPEC+ will act to restrict supply at their upcoming meeting on November 30 and December 1. The odds are overwhelming in favour of OPEC+ agreeing to delay the planned 1.9 million barrels/day January output increase by 3 months to April. It will help to bring the market back to narrow 0.9 million barrels/day deficit in Q1 from an expected surplus in December.

“Year-end targets for Brent and WTI have been set at $48/barrel and $45/barrel. A deeper pullback in global growth from renewed COVID-19 restrictions remains the main downside risk for the price of oil.” 

“Our bullish outlook for the price of oil favours further gains for oil-related currencies. The RUB has the most room to strengthen given it is already trading cheap relative to the recent price of oil developments and vice versa for COP and MXN.”

 

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