I am keeping my April West Texas Intermediate oil price forecast to range between $60 to $70 per barrel for May 2021.
As I expected, oil prices rose throughout April. As I am composing this post, WTI is near $65 per barrel.
Although the US is doing well with its vaccination program, some other countries are still struggling. I hope, though, that they will make considerable progress soon. None of us is safe until all of us are safe.
As we emerge from the pandemic with the easing of curbs and restrictions, people are going to consume more oil by traveling and meeting with friends and family. People are anxious to resume a more normal lifestyle.
The Financial Post article “Goldman sees commodities rallying over next six months on strong demand” suggests that Brent and WTI may hit $80 and $77, respectively, within six months. While I am bullish on oil prices, I am not sure if I am that bullish. Six months, however, is a long time, and I may increase my forecasts as we progress through the summer months.
U.S. bank Goldman Sachs expects commodities to rally another 13.5% over the next six months on a worldwide reversal of coronavirus curbs, lower interest rates and a weaker dollar, its commodities research team said on Wednesday.
The bank now sees Brent prices rising to $80 a barrel and U.S. West Texas Intermediate (WTI) prices to $77 a barrel over the six month period.
“We expect the biggest jump in oil demand ever, a 5.2 million barrels per day (bpd) rise over the next six months,” Goldman said, citing acceleration of vaccinations in Europe and an unleashing of pent-up travel demand.
OPEC+ has shown strong cohesion and discipline, and I expect that behavior to continue. Its next meeting is in early June.
In summary, prices should continue to strengthen as countries around the globe make progress against COVID-19. Goldman Sachs believes that Brent may reach $80 within six months. While I am optimistic that oil prices will go higher, I will reassess my forecast each month.
I hope everyone remains safe and well.