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Oil’s chances of reaching $100 in the near future aren’t so very far off if the current trends in the oil markets hold, analysts from RBC Capital Markets said in an investor note on Thursday.
“The notion of $100/bbl has evolved from completely unimaginable a few short months ago, to within striking (or hyping) distance today,” Helima Croft and Michael Tran of RBC Capital Markets wrote in their Thursday note, according to Yahoo Finance, adding that “The idea of $100/bbl remains far from a base case scenario for us, but we have learned to respect that this oil market has evolved into as much of a momentum-based market as it is a fundamentally based one when thinking about near dated prices. It often overshoots and overcorrects.”
RBC expects a tightness to remain in the oil markets through the rest of the year, as Saudi Arabia, Russia, and the rest of OPEC+ continue to display their sticktoitiveness when it comes to their oil production cuts.
For their base case, RBC expects Brent to average $91 in Q4 2023, with WTI not too far behind at $86.50. Currently, WTI crude is trading down for the day but still above that market at $87.02. Brent is trading at $90.05 per barrel. Oil prices jumped earlier in the week as Saudi Arabia and Russia announced they would extend their current production cut targets through the end of the year. Additional upward pressure was placed on crude oil from API and EIA figures that suggested that U.S. crude oil inventories—and product inventories as well—fell for another week. Meanwhile, OPEC’s oil production appears to be falling.
Saudi Arabia’s persistence this go around in cutting crude oil production is a testament to the requirements of the oil-rich nation that likely requires barrel prices at $90 or higher to sustain its budget.
By Julianne Geiger for Oilprice.com
Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.