Although West Texas Intermediate prices are hovering around $50 per barrel, we’ve seen oil prices dip into the high $40s in March, which is lower than I expected.
To understand oil prices better I read online newspapers and other sources. At lower oil prices there were more bearish articles forecasting $40 in the near term. Now, there are more bullish forecasts—for example, Reuters’ analyst John Kemp reported that Goldman Sachs suggests that an OPEC production cut extension might not be need to support prices.
I anticipate that OPEC will extend its cuts because it seems determined to provide support to oil prices. As evidence, the Wall Street Journal (subscription required) reported on March 29 the following:
Investors also welcomed comments from OPEC members who are showing a willingness to cut more of their supplies to make a dent in global inventories. United Arab Emirates announced plans to reduce its production by about 200,000 barrels from March to May, “which is actually more than was agreed,” said Commerzbank analysts in a recent note.
For the next couple of months, I continue to expect that WTI prices will stay between $50 to $60 per barrel.