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Oil Update—August 2021

I am lowering my forecast from last month by $2.50 per barrel; West Texas Intermediate oil should range between $65 and $75 per barrel for September.

Oil prices went much lower than I expected in August, especially during the middle of the month when WTI was around $63 per barrel. Since then, WTI has rebounded considerably, but many are still cautious given that COVID-19 still is strong.

Having been overly bullish in August, I am more inclined to wait to see how September plays out before getting too bullish again. On September 1, OPEC+ will be meeting. Some believe that because of the latest variant of COVID, Mexico’s production issues, and Hurricane Ida, that OPEC+ will hold off on their 400 thousand barrel per day increase, while others believe that demand remains sufficiently strong and that the US administration wants more production, so the 400 thousand barrel per day increase will proceed as planned. I do not favor one argument or the other.

I remain optimistic that fourth quarter oil prices will be higher than they are today. By then, I hope that COVID cases will have peaked in many countries.

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