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Barclays Sees Gradual Oil Price Rally

The forecasts for $100 oil are still being bandied about. But there is a new sober in the market after oil prices came crashing down earlier this week with a 7% slide.

Barclays, for one, is predicting more moderate oil price growth, eying a slow rise over the next few months, according to Reuters.

But it’s not ruling out $100 oil.

Oil inventories remain tight. In the United States, crude oil inventories are sitting at 439.7 million barrels as of the week ending July 16—that’s 7% below the five-year average for this time of year.

And the fear is that as oil inventories remain tight around the globe, oil could jump to $100 should OPEC+ drag its feet in bringing back oil production into the market. Saudi Arabia is one of the group’s more conservative members, who favors a more cautious approach to bringing back supply to the market.

Of course, as Barclays pointed out in a note on Thursday, OPEC+ wouldn’t see this as a positive step because at $100 oil, there would be some demand erosion.

Barclays expects the cooperation among OPEC+ members to continue but feels the agreement may go beyond the 400,000 bpd monthly additions that it agreed to if Iran is able to ramp up production should it reach a nuclear deal with the United States. 

OPEC+ agreed on Sunday to bring back 400,000 bpd to the market in August, and another 400,000 bpd every month after that until the entire production cut has been wound down.

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But $100 oil, while possible, is unlikely, according to Barclay’s, who sees the price of Brent averaging $69 per barrel this year, up from $66 per barrel in its previous estimate, with WTI averaging $67. Barclays sees Brent averaging $68 next year, with WTI averaging $65.

By Julianne Geiger for Oilprice.com

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