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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.

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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