Improving supply and demand fundamentals have prompted Credit Suisse to raise its short and long-term forecasts for oil prices, expecting the average Brent price at $70 a barrel this year, up from $66.50 projected earlier.
According to a Credit Suisse note cited by Forexlive, the price of Brent is set to average $69 per barrel next year, up from $68 a barrel the bank had previously expected.
The long-term forecast for Brent Crude was also raised-to $62 a barrel from $60 per barrel.
Credit Suisse also revised up its forecasts for the U.S. benchmark, WTI Crude, to an average of $67 a barrel this year, up from $62 per barrel in its previous estimate. Next year, WTI prices are set to average $66 per barrel, up from $63 a barrel expected earlier, according to the Swiss bank.
In the long term, WTI Crude prices will average $59 a barrel, compared to the previous projection of $55 per barrel.
Credit Suisse's key reason for raising its oil price forecasts is the continued improvement in the fundamentals in supply and demand.
Demand continues to surprise to the upside, while OPEC+ and the U.S. shale patch continue to exercise restraint and show strong discipline in adding supply to the market, according to Credit Suisse.
Globally, crude oil stocks will continue to draw down in the second half of this year, supporting higher crude oil prices, the bank noted.
This year, despite much higher oil prices, U.S. shale continues to keep discipline in spending on drilling, opting to spend more of its record cash flows on reducing debts and rewarding shareholders.
OPEC+, for its part, just sealed a deal on Sunday to boost monthly production by 400,000 barrels per day (bpd) beginning in August 2021 until unwinding all the 5.8 million bpd cuts it is currently keeping off the market.
On Monday, after the OPEC+ deal was announced on Sunday, oil prices were down by nearly 4 percent, with WTI Crude trading at $69.02 and Brent Crude at $70.99.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
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