WTI Crude Oil is trading around $73, down from recent lows triggered by speculation that the UAE might increase output. According to Bart Melek, Head of Commodity Strategy at TD Securities, black gold might touch $80 in the third quarter, but WTI is expected to trend lower to $70 in the next twelve months.
“A significant rise or decrease is unlikely until the market learns more about how the OPEC+ group resolves the UAE’s proposal to expand its production base. Despite COVID-19 Delta variation risks, we believe WTI might challenge $80/b sometime in Q3-2021, if the producer group limits monthly supply increases to the previously anticipated 400k b/d each month through December.”
“Throughout much of that time, it is unlikely that the lifting of sanctions against Iran will result in a significant shift in supply-demand conditions. However, if an OPEC+ plus agreement is reached and all members produce to capacity, there will be a massive oversupply and prices might plummet.”
“We anticipate that OPEC+ will reach an agreement that will continue to see supply match demand growth, with WTI prices heading back to near $70/b over the next twelve months, notwithstanding present uncertainties and high prices.”/n
