My June West Texas Intermediate oil price forecast ranges between $55 and $65 per barrel. The range is $7.50 lower than last month’s forecast.
Since last month’s forecast, analysts generally believe that OPEC+ can replace reduced Iranian oil output. Previously, some pundits were forecasting that the loss of Iranian production would lead to a price spike. Those fears appear to have dissipated.
The US and China had appeared to be making good progress toward finalizing a trade deal when the wheels fell off. Now, some are concerned that global trade will falter, creating less demand for oil. Obviously, without a trade deal, the imposition of punishing tariffs will introduce more uncertainty and hamper global trade. Because I believe that both countries realize the importance of a trade deal, one will eventually get done. My own belief is that it will happen prior to yearend. My own belief, however, is just an assumption and is not based on any hard-factual evidence.
There continues to be considerable uncertainty about Libya’s and Venezuela’s future production.
Because Saudi Arabia wants and needs higher prices to help balance its budget, I am assuming that the Brent oil price generally will remain between $70 and $75 per barrel. At above $75 per barrel, I expect that the US will exert political pressure to bring prices down. Although last month I estimated the Brent WTI spread to be about $8, a value of $10 is more realistic. Because I usually give a $10 spread, my expected range for next month for WTI is $55 to $65 per barrel.
During the latter part of June, OPEC+ will meet to decide what, if any, production changes should be made. And the G20 summit will also be held, where there will be an opportunity for the US and China to possibly reset their trade negotiations. Until then, though, I continue to expect considerable uncertainty and, possibly, volatility.