Barclays raised its oil price forecast for crude oil by $4 a barrel but noted that the price improvements will be slow.
Reuters reports the bank now expects Brent crude to average $41 a barrel this year, with West Texas Intermediate seen at $37 a barrel. Yet in the third quarter, Barclays expects Brent crude to trade at an average of $37 a barrel and WTI at $34 a barrel.
Right now, both benchmarks are trading below $40 a barrel, with Brent at $37.68 a barrel at the time of writing and WTI at $35.43 a barrel. They are both set for their first weekly decline after a tentative but extended rally. The rally, however, was not strong enough to sustain initial optimism following reports from OPEC+ balance would soon return to oil markets.
Meanwhile, another bank has warned the price rally would fizzle out soon. Earlier this month, Morgan Stanley said the price rise from recent week "appears mostly supply- rather than demand-driven, and it is questionable how strong refinery runs can increase against this backdrop."
Despite the continuous market-fixing efforts in supply by the OPEC+ group, the world's consumption of oil is unlikely to return to the levels before the coronavirus pandemic until late next year, according to the bank.
Other concerns about an oil price correction include U.S. shale restarting too much production as prices rise, as well as a sharp rise in oil production when OPEC and allies start unwinding the cuts, Morgan Stanley says.
Goldman Sachs is also guarded in its forecasts. In fact, the investment bank is rather bearish on oil right now. Citing uncertainty around oil demand recovery, Goldman said last week it expected Brent crude to soon slip down to $35 a barrel as expectations about a quick rebound in demand for oil turned out to have been overoptimistic.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More