US West Texas Intermediate and International Crude Oil Futures Finished Higher Last Week Despite Late Weekly Concerns About Increasing Production After Texas Freeze, U.S. Dollar More strong with concerns that OPEC could change production slightly higher in April.
Last week, WTI crude oil futures in April settled at $ 61.50, up $ 2.24 or + 3.78% and May Brent crude oil futures closed at $ 64.42, up $ 2.28 or + 3.54%.
Despite how few stops it was at the weekend, some are expecting more strength. This surprises us somewhat as prices are well above pre-pandemic levels while demand remains below levels seen before the pandemic struck a year ago.
Ultimately, it all depends on whether there is enough speculative money out there to continue to encourage traders to buy strength, or whether valuation is going to be an issue and prices fall back to support range.
Bank of America Hikes 2021 Brent Price View with $ 10 / bbl on Strong Oil Opportunities
Bank of America (BofA) Global Research raised its forecast for Brent crude oil prices for this year announcing tighter supply due to Texas and OPEC + yield freezes and unprecedented global monetary stimulus, he said in a note -week last week, and Reuters reported.
The bank now expects Brent crude oil to average $ 60 per barrel in 2021, up from a previous estimate of $ 50. BofA also predicts West Texas Intermediate (WTI) crude prices on average $ 57 per barrel this year.
Brent prices could temporarily spike to $ 70 a barrel in the second quarter of the year, bank analysts said in a note.
“The severe freeze in Texas last week should reduce global investments by an additional 50 million barrels, supporting (oil) prices,” the BoFA said.
The bank also said Saudi Arabia’s additional voluntary oil production cuts in February and March and the Organization of Petroleum Exporting Countries and Allies (OPEC +) also maintained supportive production.
An OPEC + supply contract that expands into the first quarter has removed an additional 180 million barrels from the market, creating more additional capacity, they said.
However, BofA noted that the lowest short – term risk in oil prices could come from a new contract in Iran, which could bring 2 million bpd into the market in a short order.
Short Term Forecast
Buy Strength or Buy Weakness? That is the question. Are the foundations strong enough to warrant another break above, or do we expect a short-term pullback into a value range?
The questions suggest that we could be the result of a range trade so that the market works out issues with OPEC + ’s plan to increase yields slightly when it meets on March 4th. We also want to see how the market responds to the increase in output from the previously closed Texas. refiners.
In addition, one or two wildcards have gone into the picture. They are rising in Treasury yields going up U.S. Dollars and could reduce demand for dollar-denominated crude. And the potential for Russia to call for a further boost in OPEC + ‘s effort to reduce supply cuts.
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