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Oil Update—May 2021

I am increasing my West Texas Intermediate oil forecast for June by $2.50 per barrel to range between $62.50 to $72.50. My May forecast was $60 to $70 per barrel.

Although US vaccinations have slowed, people continue to receive vaccinations, the US will be providing unneeded vaccines to global regions, and more regions are reopening. As I stated last month, 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.

There have been a lot of crosscurrents recently with court decisions and shareholder activists. I expect more of the same as the ESG movement gathers even more strength. My own view is that the ESG movement will damp needed investment and may result in higher oil prices over the short term of the next few years. Furthermore, analysts are trying to gauge when Iran may legitimately reenter the market and its effect. While no one knows with certainty what the resultant effects may be, my intuitive guess is that OPEC+ will help moderate the effects of its reentry and the market will be able to accommodate the extra supply.

Just like last month, I continue to expect that prices should continue to strengthen as countries around the globe make progress against COVID-19.

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