Ugurhan
My forecast for WTI crude oil prices in June remains unchanged from May. That is, WTI should be in the range of $75 to $95 per barrel. A narrower range would be $77.50 to $87.50 per barrel. This is the third month in a row that my forecast has changed from May. No changes have been made.
As of the time of writing this blog post, WTI is hovering around $77.25 per barrel, just below my narrow range, and I expect WTI prices to rise in June.
Nothing substantial has changed in the past month. Concerns remain over China’s recovery and growth. Wars continue in the Middle East and Ukraine. The US central bank remains concerned about inflation.
A few months ago, when oil prices were soaring, many oil experts predicted that the OPEC+ meeting would be held in a few days. This is to inject more oil into the market. Reuters news article from May 31st “OPEC+ is working on a complex agreement to cut production for 2024-2025, sources say,” with some suggesting even bigger cuts could not be ruled out.
LONDON, May 31 (Reuters) – The Organization of the Petroleum Exporting Countries (OPEC+) is working on a complex agreement to extend some of deep oil production cuts into 2025 for an agreement to be reached when it meets on Sunday, three sources familiar with the OPEC+ talks said on Thursday.
OPEC+ has been implementing a series of production cuts since the second half of 2022 in response to rising production from the United States and other non-member countries and concerns about the demand outlook as major economies grapple with high interest rates to tame inflation.
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“Given (Saudi Energy Minister) Prince Abdul Aziz bin Salman’s penchant for Hollywood-style twist endings, we can’t completely rule out a twist in the form of more severe cuts,” said Helima Croft of RBC Capital Markets.
May 31 Bloomberg article “Key oil ministers head to Riyadh as OPEC+ plans change again” (subscription required) said the production cuts would be extended until the end of the year and possibly into 2025.
Major oil producers OPEC+ are due to meet in Riyadh this weekend to discuss cutting crude production after the Saudi-led group revised its meeting plans for a second time.
Delegates due to meet in the Saudi capital on Sunday will include officials from Kazakhstan, Russia, the United Arab Emirates and Kuwait, the officials said. They will discuss extending the supply limits to the end of the year and possibly into 2025, they said, speaking on condition of anonymity because the information is private.
My personal view is that the emphasis will be on compliance with the voluntary cuts, which will continue through at least the end of the year. Oil prices will likely rise as the Northern Hemisphere moves into summer and the driving season gets into full swing.
Editor’s note: The summary bullet points for this article were selected by Seeking Alpha editors.
